You have run your company successfully for years and have decided you want it to stay in the family so you’ve asked one of your children to join next month……
So many family businesses make an assumption that because they have run it successfully for years and it’s their company, whatever they do will work out ok. However there are many pitfalls that can easily become major issues, many of which I have seen happen and are circumstances I’ve learnt to successfully manage.
Scenario 1 – The chosen one
So, the company has a good and established team with years of experience and success and you decide to bring in your son or daughter straight out of University to be MD designate. You think it’s a great idea as it’s keeping it in the family. The staff who were hoping for promotion or other recognition for their hard work and loyalty will almost certainly resent this new person who they see as having no experience or expertise but who they will now be reporting to. They will not have earned your teams loyalty like you have. I’ve seen this happen followed by the businesses best people leaving and the turnover plummeting.
Scenario 2 – Which child to choose
Or you have three children. In days past, the business will have automatically been passed to the eldest but in this competitive world you need the best leader. What happens if that’s the youngest but the first in line thinks it’s their destiny? Do family loyalties come first, or the long term needs of your company and 20 employees ?. Will it all cause a major rift in the family?
Scenario 3 – None of your children are qualified
Or none of your children have the right experience and expertise. You know this but can’t seem to admit it to them. Do you bring in an ‘outsider’ or decide this is the time to let go and capitalise on your hard work by selling up to ensure a comfortable retirement. The benefit could also be some capital for your children to use as they wish and no family rifts if it is managed well, but usually you don’t manage it well as it’s your family.
Having you drafted your succession plan?
Statistics from BERR and PWC show us that only one third of family firms now get passed on to the second generation and 53% of owners anticipate a change of ownership in the next 5 years but have not drafted a succession plan. As family businesses are known as the ‘backbone of our economy’ it’s vital to our economy and family wealth that these businesses survive and you might feel strongly about leaving your family firm as your legacy.
If you want to ensure no family rifts and a successful succession plan or exit, I can help you to avoid the pitfalls. Call me, Susan on 07510 692969 for an informal first conversation, personalised support and guide to the next steps.