[Blog 44] Family Business Succession Planning – How To Do It?
Generally, most family business owners and entrepreneurs are busy growing their business and find themselves so bogged down in the day-to-day operations, that they don’t strategically plan for succession planning and how the transition may impact the business.
Every family has its story. Whether it is to build a lasting legacy, protect the family’s wealth or simply to see the business transferred to the next generation, the health and longevity of a family business depend on careful transition planing. Without which, succession planning will become a perennial problem and the family members may end up with conflicts, wrangles and legal battles.
It is therefore vital to start the succession planning process early. If you’re a family business owner expecting that one or more of your children will take over the venture at some point, the earlier you can start planning for that transition, the better.
Long-term succession planning can give the next in line time to learn the management tasks. Milestone projects can be given to assess the capability and leadership competencies before taking up the role. To some extent, as the owner of the business, you will be able to see how well your child does. The longer the succession planning, the more opportunities one has to sharpen and display their skills to be a competent leader.
How do you know which child can take over?
The most important thing will be to determine which child or children will run the business and when they will be ready. Such decisions can be difficult moments for families and affect the harmony amongst family members.
Some owners mistakenly assume a specific child can take over the business when the reality is the son or daughter lacks the appropriate experience and expertise.
Therefore, a long-term succession plan is vital to make a fair and transparent decision that all can understand and adhere to.
What if your child or children don’t have interest in your industry/business?
The number of younger generation keen to work in family business is greatly reducing.
The younger generation is more educated, exposed and believe in making their own choices in their career. They may not share the same passion or interest as their parents in the past.
So what can you do to bring them on-board. Here are some tips:
- Engage a family Business/HR Advisor to present a snapshot of the industry and your business potential to your child/children.
- It is vital to understand what your child/children are keen in and their aspirations so that your family Business/HR Advisor can present to them in a way that attracts their attention
- Always have breathing space. Do not expect your child to agree at the first instance or display the much of passion as you do. Everyone is different.
- Through the family Business/HR Advisor, get information/ideas on how your child/children think they can run your set up better.
- Take their feedback positively and be open to change.
How can a family Business/HR Advisor help you once your child/children are convinced:
Assuming one or more of your children are interested in owning and running your family business, work with a family Business/HR Advisor to help make the succession process smooth.
Family Business/HR Advisors can do a strategic succession plan where he/she can advise you on how to position your child/children, enhance business processes, create succession milestones with you, set up your key support team to support your child/children to achieve those milestones. He/she is the individual that will prepare the organisation for your child/children before they come on-board.
The family Business/HR Advisor can also play a significant role in being the mediator or negotiator between you and your child/children. This will greatly assist to smoothen the succession process.
Carrying out a family succession planning can be a daunting task but with the help of a family Business/HR Advisor, this process can be the best method to ease possible tensions that can arise when a parent speaks to a child.
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