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Succession_Planning_Obstacles_in_Family owned_Businesses
| Succession Planning Obstacles in Family-owned Businesses
Succession Planning Obstacles in Family Businesses
Just like a physical obstacle course, succession planning for
family businesses is like an obstacle course. You have to find
the obstacles, then overcome them... fly over them, dig under
them, outflank them to move around them. And it is often the
ones that you didn't see that cause you the biggest problems!
Every family and family business situation is different, so
there is no one "master map" because there are no fixed or
defined obstructions. However, certain things do tend to appear
frequently, so we've compiled our checklist of frequent
obstacles. If you look for and deal with these, you will have
greatly improved your chances for successful succession.
A note about terminology: we have used "Dad" to identify a
founder or retiring owner.
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Important Note About This Checklist! The goal is not to
determine whether particular obstacles are true or not...
...If the point is perceived to be true or present, then it IS
an obstacle that has to be dealt with.
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Founder or Retiring Owner
First, and most importantly, Dad must believe his financial
security is assured. Without this perception, there is a major
obstacle and the probability of Dad leaving the business
"voluntarily" is significantly reduced. What is Dad going to do
with the time and energy he had committed to the business?
Obviously Dad must be able to envision a positive, productive
and meaningful existence away from the business. Without having
something to "move to" Dad likely will not "move from"... Will
the transition diminish Dad's self- esteem and negatively impact
his self- concept? Very often in our society, "who we are" is
generally described by "what we do". With regard to the kids,
the most perplexing problem for Dad is how can he be both FAIR
and EQUAL.
As a parent, Dad's instincts are to try and be equal to all his
children. That is to say, he does not want to show any
partiality to any one child. Yet as a businessman, he knows the
business can not be run well by a committee of his heirs. It is
more logical to select one of the children to lead the company
into the future. Both facets of this issue produce ample
opportunities for Dad to procrastinate or to avoid dealing with
the entire concept of succession planning.
Is the chosen successor ready and able to run the business? If
so, how can that be proven? The spousal relationship must be
considered. Mom's idea of retirement may not include "sailing a
boat around the world". In other words, even though the wife may
not have had a visible role in the planning or the running of
the business, she must be included in the planning for the
transition to retirement if the process is to be successful.
Although it is not frequently discussed, Dad's reservations
about his fiduciary responsibility to long term, non family
employees should be addressed. Who will look after them when Dad
is no longer in the business? Dad's friends continue to work in
their businesses or jobs Fear of death Reluctance to give up the
power and sense of control Jealousy / rivalry toward successor
Lack of coaching skills - tendency to focus on immediate
problems that can be solved rather than "future" problems
Family
spouse's role in business reluctance to discuss the future
beyond their parents' life fairness versus favoritism fear death
of parent(s)
Employees
personal relationship with the founder differentiating amongst
key managers reluctance to establish formal controls fear of
change
Outsiders - Customers, Suppliers
clients or suppliers depend on the founder clients or suppliers
do not trust or have confidence in the potential successor(s)
Deal with the obstacles we have outlined here and you will have
significantly improved your chances for a successful succession.
About the author:
Don A. Schwersler and David Jones are Partners at the Family
Business Institute - a special resource for family-owned and
closely held businesses
(http://www.family-business-experts.com).
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