As the baby boomer generation approaches retirement, or in some cases has gone beyond
their ideal retirement age, so succession planning rears it’s ugly head. I say
ugly, because succession planning within a family business is a potential
minefield of hurt feelings, business and financial ruin, misplaced family
devotion and enormous financial risk.
I say this, having grown up with
the expectation that my cousins and I would take over the family business from
my father and his brothers, who in turn had taken over from my grandfather. My
cousin’s also viewed the prospect with very little pleasure, however, we realized
that for most of us our families financial well-being rested upon the business
and therefore our succession into it. There are not many people who can say that
the African dictator Robert Mugabe did them a huge favour. My cousins and I
believe we are amongst the few who can. My family business was in the mining
sector and this was one of the first that Robert Mugabe decided to nationalize.
And what’s more we were actually paid a small percentage of its true value
unlike those who followed. Could we have told our family that we didn’t want to
take over? Had we been completely inept would the family have told us where to
get off? Luckily I’ll never know.
I have just watched two businesses go through a change of family ownership. One was enormously successful and has reinvigorated the business, the other has brought a fabulous business to the brink and left siblings estranged.
The difference? Communication! Oh and a plan.
If you are thinking about passing a business down and are concerned
about your kids ability to give you financial security into your twilight years,
you need a plan. Actually a strategic plan, with a needs analysis. What do the
leaders of the future company need in the way of skills and experience. Where
are they now and what has to be done to get them there: further education;
training or working experience outside of the business. This will help to
either get buy-in or prompt opt-out from the succeeding family. Make sure it is
an inclusive process. Lead your kids gently to their own conclusion and vice
If you need to look elsewhere you have to prime your business for
sale. Make it turnkey so it runs on autopilot without you there. But that’s
another article altogether