Family Business Update
Starting the Conversation
The willingness of family business owners to plan for their succession is often a critical factor determining whether their business survives to the next generation (NxG), fails or is sold. A well-structured approach to succession planning will reduce the risk of failure and provide a solid structure for the NxG to grow the business.
The obvious thing to do is “start the conversation”. Many founding owners have a succession plan but it’s in their head and they are the only person aware of it. This plan will be based on a large amount of assumptions regarding their own future health, wealth (ability to fund their own retirement) and what they think the NxG want. The problem is they will not have discussed it with the NxG or have asked them about their perceptions and aspirations for themselves both in and out of the business. The NxG need to have the desire to be in the business, never mind consider leading it. They need to be capable and also, be at the right stage in their own life to have the best chance of success.
The planning process involves disciplined time set aside by business leaders to work on the business instead of in the business. Prioritising business planning will facilitate a step towards succession conversations as this will inevitably come up within these planning sessions. Once the conversation starts – keep it going! It could be beneficial to have a family business consultant facilitate some of these discussions. They will be equipped to deal with the emotional side of the discussion that will arise, as well as the practicalities of advising on the governance of a family business. They will be completely neutral endeavouring only to play their part in supporting the family to achieve its goals.
Clear communication is paramount to avoid uncertainly and future conflict. The whole family should have clarity on what the future plan looks like and what part they have to play in it. NxG who will play a significant role in the future of the business should be given an active voice in key issues affecting the family business. Responsibility for areas of the business activities or particular projects that NxG are held accountable for should come with the authority they need to operate without feeling their hands are tied when it comes to decision making.
Education and training needs should be discussed with the NxG to identify support required for their personal development. Sourcing a suitable mentor for NxG can be a huge benefit in their personal development and you can speak to your Business Growth Manager if you would like to find out more about organisations providing this type of support. Peer to peer support is also invaluable and through attending the range of family business seminars and other general business seminars we hold in North Ayrshire you can network with other NxG’s at similar stages in their family businesses.
Finally, if you would like to arrange to meet the Growth Team’s family business advisor for an informal discussion on any family business issues please just let your account manager or advisor know and they can arrange an introduction.
STEP Accredited Family Business Advisor
Posted on Wednesday 5th September 2018