How to Make Family Business Succession Planning Successful
Updated: Oct 27, 2020
Here are some tips on how to make your family business succession plan a success.
Family Business Succession Planning
Creating a formal family business succession plan is a proven strategy to minimize family conflict and turbulence. Most of us don't enjoy conflict and stress in our family so put this strategy to work to help you be successful at transitioning your family business from one generation to the next.
1. Get Professional Advice
Statistics show that only 30% of family owned businesses are successful transitioning their family business from the first generation to the second. This is partly due to the fact that many owners try to do this on their own. Since most owners only go through the succession planning process once in their life, they have no experience and limited knowledge working through the process.
Transitioning your business may be the largest financial event of your life and one of the most significant changes that your family goes through. Set yourself up for success and pay for some experienced help. It will be more than worth it.
2. Try to Keep Family Relationships Separate from Business Relationships
This isn't an easy thing to do as I'm sure you've already experienced. And again, this is were an experienced third party family business consultant or adviser can really add value. It's easy for things to get personal in a family business. And even easier when we are talking about family business succession planning. Emotions and expectations are prone to run high so you need to be prepared for it and plan for it. At the outset you need to explain to all family stakeholders that the business has to survive the transition and the decisions that everyone makes need to reflect that one core goal.
3. Set a Timetable and Stick to it.
It's hard for an owner to step away. But it's equally hard for a future owner to stay in the business, or at least stay engaged in the business if there is no timetable for the ownership transition to take place. Your family business succession plan must include a schedule for when the ownership and leadership transition will take place.
Apply these tips to your family business succession planning to ensure that your family business doesn't become a statistic.