Cheat Sheet: Keeping it Going and in the Family

BY EILEEN MCCLELLAND

Published in the March 2012 issue

According to the authors of Family Business Succession: The Final Test of Greatness, the best business succession is one that hardly anyone notices. “It should be a non-event, an evolutionary process arising from careful planning and the artful management of expectations over a period of years. When the baton finally is passed, the reaction should ideally be, ‘Oh, that’s what everybody expected.’” 

  • Managing succession means preparing for setbacks, and sometimes, taking a different road to reach unsuitable.

  • Throw the kids out ... for a while. Encourage potential successors to get three to five years of experience outside of the family business, preferably in a larger company. They’ll learn new skills, get fresh ideas and bolster their selfconfidence.

  • Set standards. Lay down high standards for the successor and plan regular evaluations.

  • Allow for as long as 15 years to plan and execute a smooth transition. Most owners begin thinking about succession at 45 to 50 years of age, with plans to retire at 60 to 65. Beginning the process at this stage allows the time necessary to groom and choose among candidates. If you’re considering passing the business to a sibling partnership, it gives you time to help your children develop as an effective team.

  • A phased transition that is clear to everyone is usually best. By year 10, the successor should be fully in charge.

  • Create a family forum in which members can resolve differences, as well as nurture family support.

  • Spend some time away from each other, but also spend time with each other just for fun. No shop talk allowed.

  • Make sure there’s a solid plan for Mom and Dad’s personal financial security, otherwise concerns over risk may stymie business growth.

  • It’s important to have a contingency plan in place that recognizes the unexpected death or disability of the CEO. Consider installing an outside board of advisers to help with a transition to new leadership, if necessary.

  • When the time comes, let go gracefully. Don’t meddle.

{JFBCLike}

{JFBCComments}