Family business succession planning is an important part of many businesses. Research indicates that family businesses typically outperform non-family businesses. When families are able to work together effectively the outcome is significant. However, many family businesses are unable to make the transition from the first generation to the second generation successfully. And very few family businesses survive the transition from the second generation to the third generation.
This makes family business succession planning critical!
The Family Vision
One of the things I enjoy most about the work I do is working with families in the business succession process. It’s so inspiring to extract the knowledge, wisdom, and experiences of the founding generation and then help translate that to a meaningful mentoring experience for the second generation. Equally inspiring is extracting the new ideas, creativity, and idealism of the second generation. I get the privilege of translating all of this into a shared vision for the future of the company.
As one can imagine, families learn more about their collective vision for the future, the communication typically increases and deepens, and family members get the chance to share their perceptions of the legacy that will carry on. The family typically bonds in ways that are distinct from other efforts.
Delicate Questions to Ask
The greatest challenge for me as a coach is to guide the family through a number of delicate questions such as:
- Who ascends to what leadership role?
- Who is invited to be an owner?
- Who holds whom accountable?
As with all succession planning, the first-generation owners must wrestle with questions related to timing and financial distributions. But the need for strong business continuation in the family business is more acute and the central conversation. However, it’s a family conversation now so the potential for highly charged emotions is much greater.
Succession planning should really be viewed as a lifelong process and an ongoing conversation for the family. However, if the conversation is prone to extreme or intense emotion it will likely breakdown and falter. It’s best that continuity planning become a mindset and a positive part of the family culture not a source of contention and division.
How Families Navigate Succession Planning
To help families navigate and embrace these conversations I like to focus on three topics:
- Family Values and Vision
- Business and Family Governance
- Strategy and Execution
This is a learning process for every family since practically none of them have ever been through anything like this before. Therefore, the conversation needs to be proactive, ongoing and enriching to all involved. Issues must be identified, addressed, and resolved before they become “family problems.”
For me as a coach and facilitator, this is an exciting and dynamic process. It’s incredibly rewarding to see not only a business flourish but more importantly to see a family flourish. I will be sharing more in future blog posts, but I invite you to contact me to discuss how a more intentional family business succession process can benefit your family.