This year sees the 93rd birthday of Queen Elizabeth II, who is the longest serving monarch in British history, but her succession planning has been in place for many years and although it is laid down with the ‘line of succession’ clearly laid out and known to all. It is obvious that other members of the ‘family’ are becoming actively involved in the family business in preparation to take over.
As an owner manager of a business that is owned by you with other family members, is your succession plan in place, accepted by your stakeholders – not just family members, other directors, employees, customers, etc.? Research has shown that there is a lack of documentation around the future ownership of a family business with only 24% of business owners having a policy that the business will remain family owned, with 40% having no specific policy at all regarding the future ownership. What is more surprising is that 84% regard succession planning as important but there seems to be apathy towards doing anything to address this. Over 75% of family business owners have not documented management or ownership succession plans and only 44% have actually sought advice about their succession options.
Part of this apathy would appear to be family business owners think that there is no interest from the family to take on the business, or simply that there is no-one within the family suitable.
This may be very true. Many owner managers I work with have deliberately ensured that their children have not been brought into the business, and many children themselves want to develop their careers away from their parents’ business. As time goes by, it becomes less likely that a grown up child will want to return to the business, although they are very happy to share the financial rewards of their parents’ hard work.
Also, it is very frequently heard that the founder does not want to give up what they have created and developed. This frustrates the preparation for succession and can lead to the founder ignoring the need to choose and mentor a successor.
So if as an owner manager of a business, you want to start thinking about successful succession planning, ask yourself some serious questions (and answer honestly). These questions include:
- Are the current owner managers finding a suitable successor from within their family? (Yes/No)
- Have alternative exit strategies been discussed openly within the immediate family? (Yes/No)
- Has everyone involved in the business fully understood the founder’s vision? (Yes/No)
- Is the founders’ vision important to next generation successors? (Yes/No)
- How does entrepreneurship succeed from one generation to the next?
- Do the 2nd & 3rd generations have more entrepreneurial vision than the founding generation? (Yes/No)
- How can we learn from the experiences of existing family businesses that have gone through the succession process?
For help in getting advice on successful succession planning between generations of the family – fill in the contact form below or call 01844 319286, and Phil can arrange a call with you. Specifically he will be able to discuss with your confidentially and unemotionally
- Recommendations for succession and inter-generational estate planning
- Understanding family business challenges and conflict
- Understanding the dynamics of an entrepreneurial family business