With many family businesses, the time to think about succession planning starts on Day One. It’s a complicated subject, sometimes fraught with emotional baggage, but is critically important, nonetheless. After all, lacking a chosen successor and development plan, “your family business will likely die along with you” or, just as importantly, the business “could become an insurmountable burden to the family members left behind.”
Clearly, these scenarios are untenable for family business owners and CEOs. That’s why now is a good time to think about succession, keeping these tips in mind:
Start planning today.
As noted, it’s vital to begin thinking about succession as early as possible. While you don’t necessarily need to have a specific individual in mind (this could change over time), frame your strategy around what’s best for the company, its employees, customers, and other stakeholders. This should help guide your most productive thinking on the subject.
Engage family members in a “succession discussion.”
As owner or CEO of a family business, “making your own succession plan and then announcing it is the surest way to sow family discord,” says The Balance Small Business. Instead, engage with family members to learn who “wants to be involved directly and who is focused elsewhere.” This helps identify individuals with the most incentive to keep the business going.
The Family Business Consulting Group suggests talking to your children along these lines: Your interest in the business is welcome, “but it’s clearly not the easiest way to live or the only way to live.” Rather, entering the business is “one of your many options and we will support and encourage you” regardless of your decision.
Talk to outside advisors.
Your succession planning efforts will benefit considerably from enlisting the advice of outside advisors (a lawyer, financial advisor, membership in TAB). Trusted individuals can offer insights you may not come up with on your own, and they will also alert you to potential pitfalls or obstacles that aren’t immediately evident to you.
Make employees aware of succession planning.
While it’s not necessary or appropriate to involve employees directly in succession planning (unless the best candidate to succeed you is, in fact, a trusted employee), they should never be kept out of the loop. Why? As the US Chamber of Commerce notes, employees “have a right to know a succession plan is in the works” and because “your successor is going to need the acceptance and cooperation of non-family employees who may be the ones offering training.”
Your team is a critical business asset and should be consulted wherever possible.
As soon as you identify a successor, initiate training.
Choosing a successor is no easy task, but once you pass this milestone, keep the momentum going. At some point in the not-so-distant future, he or she needs to start training in both the technical skills and soft skills of running a successful business. The chosen individual may or may not arrive with high-level leadership skills in place; whatever the situation, building those skills should be at the top of your priority list.
In many cases, training can extend over a year or longer, in order to have time to work closely together at the outset and then to allow this person to start leading on their own.
Want to learn more about succession planning? Check out our in-depth article, “6 Tips on Making a Family Business Partnership Work.”