5 Mistakes Family's Make When Planning for the Succession of Their Family Business.
Updated: Oct 27, 2020
Save Yourself and Your Family the Stress and Conflict Caused by These 5 Common, but Avoidable Family Business Succession Planning Mistakes.
In my work as a Family Business Adviser who helps families successfully create Family Business Succession plans, I have seen some common mistakes that business families often make. These mistakes create strife and stress between family members. And in some cases, they cause a breakdown of family communication and unity.
If you are a member of a family owned business, please take note of these 5 mistakes:
1. Failure to Communicate
Sometimes with family, it's hard to talk about the everyday business stuff, let alone the tough stuff. By tough stuff, I'm referring to retirement, death, money and inheritance.
Is the hair standing up on the back of your neck yet?
For most of us, one or more of these topics can create angst and anxiety, so we avoid talking about the tough stuff. The problem is that by not talking about these things, especially in terms of family business succession planning, the lack of communication leads to uncertainty, suspicion and unmet expectations.
To avoid the hurt that can result from a lack of open and honest communication, make a concerted effort to make time to discuss these issues. Just as you would plan a board meeting with an agenda, you need to plan structured meetings with family stakeholders to discuss the very important matters of succession.
2. Failure to Seek Outside Expertise
Many families only go through the succession planning process once. So it is expected that mistakes will be made. However, it is these mistakes that can ruin a business and a family. I have seen mistakes do both.
So hire the experience and expertise of a family business professional who can lead you through the succession planning process and help you avoid the pitfalls that many families fall victim to.
3. Delaying Succession Planning
All I can say is, "Don't do this!"
And not only don't delay, but start the planning process early. The earlier you start, the less stressful it will be and the more time you will have to develop and implement a plan that is the most beneficial to you and the business.
I have seen many cases where no succession plan was created before the death of the owner, and the living family members were left to sort out the mess. In most instances, the family or the business could not be saved.
Truly a very sad thing to see.
4. Choosing Not to Plan
This is a conscious decision of the owner not to plan, and like #3, it can have devastating consequences for the family and the business.
A business family should approach succession planning just like any project, like a business expansion or a construction project. A plan is formulated, milestones are set and a timeline is followed.
When we put succession planning in a business context like this, it helps take some of the fear and emotion out of it and makes the process more familiar and approachable.
5. Failing to Define Job Roles and Responsibilities
This is a very common mistake both within the context of family business succession planning and family business as a category.
For some reason we think, 'we're family, we don't need job descriptions.' In fact, the opposite is true. Because we are family we need job descriptions and structure more than non-family owned businesses.
Family business is charged with emotion and relational history that is sometimes easily aggravated. A lack of structure only increases the likelihood that the family roles and the business roles will cross over one another and cause conflict.
To ensure that your family business is able to complete a succession plan without ruining the family or needing to sell the business, ensure that you don't make these common succession planning mistakes.