Failing to plan means planning to fail
The most dangerous ‘failure factor’ on the horizon for the family firm is the succession process. The transition from one generation to the next is critical and often this is the most significant risk to the ongoing success of the business.
The personal and professional elements of the business can bring these two dimensions into direct conflict, with both the family and the firm at risk as a result. However, a well-managed succession process can bring all aspects of the family firm together, generating new energy for growth and diversification.
To do this effectively family businesses need to develop, implement, and communicate a robust succession plan, and do so as early as possible before the actual handover. This is even more important now, when many more people are having children later in life, meaning that the next generation may not yet be ready to take over when the current owners would like to retire. And yet only 15% of family firms have a ‘plan’ for their succession process.
Succession planning is even more important where there are some family members working in the business and some not. In many of these cases, issues like ownership and entitlement may not have even been discussed or considered, which means different people are making different assumptions about the future. In these circumstances, its essential that family members get help from specialists who can then spend time sitting with family members, helping them work through a fair way forward. This prevents any potential conflict, and help the family become more unified for the future.
Paul Harris of Real Success Ltd, is the host of Solihull branch of The Family Business Practice which is a unique Midlands-based business development and networking organisation for owner-managed and family businesses and businesses that supply owner-managed and family businesses.
Today, the Practice has over 80 members ranging from husband-and-wife consultancies to businesses employing over 200 people. The one thing they all have in common is that they are all family businesses and they think, act and do differently to their corporate equivalents. You can find out more about the Family Business Practice here.