Pub. 3 Issue 3

20 www.glancda.org YOU WANT THE BUSINESS TO SUCCEED, RIGHT? GIVE THE BUSINESS TO THE BEST PERSON FOR THE JOB. ANY OTHER DECISION IS JUST ASKING FOR FAILURE. access to it throughout the company. When should a succes- sion plan be put together? Again, there’s no one answer. Are you in your 50s, in good health, and happy to continue work- ing? You might want to pick a retirement date, count back 15 years, and create a succession plan at that time. What if your health is poor? Putting a succession plan together now instead of later might be the smart thing to do. Even if you delay writing a plan, though, remember that life is a study of the unexpected. It’s highly unlikely that your life will unfold ex- actly the way you think it will, so you might want to consider creating a plan sooner than later even if you don’t think you will need it for a while. What are the pitfalls involved in creating a succession plan? • Some business owners are too caught up in the day-to-day minutiae. Running a business is challenging. It’s also a lot of hard work. However, there’s a point where either the owners pull back and take a look at the bigger picture, or they stay stuck in the details. And if they don’t learn how to look at that bigger picture — say, by deciding how their business could outlast their guidance — then chances are good they won’t ever make that bigger pic- ture a reality. • Some business owners keep the control too tight. If the controlling generation is the only one to make the plans, though, why would the younger generations support that? They’ve got no investment in the shift and they might very well have their own ideas as to how the future ought to be handled. Succession is often something that requires going through several stages. All the stakeholders need to be involved if that’s going to work. Even though the busi- ness owner has a huge say, outside help will add credibil- ity to the plan and involving employees will make it less likely that they feel disenfranchised by the process. • Not everyone is qualified to give advice. Business families in particular have specific challenges. If you want expert help, consider finding a certified advisor with training from the Institute of Family Enterprise Advisors (IFEA). Family dynamics are simply not something most MBA programs address, but the fact is that family businesses are just more complex than those that aren’t family busi- nesses. You should also make it a point to increase your own understanding. Having access to expert advice is not an excuse for not developing your own expertise. You will get much more out of your expert help if you under- stand the issues and can talk about them. • It’s more difficult to act as a family and as business partners than just as family alone. You can improve your chances for success if you create a family infrastructure, including meetings, where information can be shared freely and where decisions can be made both about busi- ness and about the family itself. Don’t try to put a barrier between the two. You don’t want to exclude anyone, have people being secretive, make unwarranted assumptions, or get involved in procrastination. Put a structure in place so that everyone (including the in-laws) will have a time and place to talk. If someone will be affected by your decisions, then they get a say in those decisions. • Multigenerational communication is not easy. Does your family have ways to manage conflict in a way that isn’t adversarial? Do the generations have the same ideas when it comes to core values and missions? There’s a tradeoff to be made between experience and flexibility. Sometimes things are done a specific way because it really is the best way, and younger generations discard those methods at their own peril. But sometimes the older generation has gotten stuck and needs to explore new ideas and new ways of doing things. How do you find the balance? You talk, at length, about the reasons for change and the reasons for staying the same. You gain an understanding of the other person’s point of view. And then you make an informed decision. • No family business should be handed off to someone who is untrained or doesn’t have the ability to do the job. Hir- ing, review, and firing policies should be applied across the board, to family and to those not in the family. If the best person to head up the company’s next generation is not a member of the family, then that’s the person to choose. You want the business to succeed, right? Give the business to the best person for the job. Any other decision is just asking for failure. • Plans need to be updated periodically. Like any other document, writing them once and then forgetting about them is not going to work. Decide how frequently you will review them, and then make sure that review takes place, on time, as many times as necessary. • f you plan to sell your business, make sure you know whether that’s realistic. Most buyers want a going concern, not something that requires time and effort on their part. Make sure you understand what your business would have to be in order to be sellable. If you take the time to put a plan together, you will at least have increased the odds of success.   Family Enterprises — continued from page 19