Many family business owners hope that their children
will one day take over the business. They dream of working side by side with
the next generation. They often assume that the transition in leadership will
happen naturally over time. However, hoping and dreaming about a future for the
business, and assuming that day will come, won’t make it so. As baby boomers
rapidly approach retirement, succession planning can no longer be kicked down
the road to tackle another day. It is an all too common refrain to find business
families that are not making concerted plans to transfer the family firm to the
next generation. Beyond just an estate plan to transfer legal title to the
business, building a business family legacy requires successfully transitioning
from one generation to the next, and that transition takes hard work.
Business families frequently struggle – or even
fail – when they do not address and actually talk about the longevity, the
vision, and perpetuation of the business and commit those plans to writing. Talking
with the next generations about the future, talking about a longer time horizon
than Wall Street allows for publicly traded companies, and discussing adequate
preparation and development of the next generation of leadership opportunities
to both strengthen family relationships and strengthen the future leadership of
the business.
Business families succeed when they are able to
discuss the difficult issues, plan for the future, and work together as a cohesive
unit in a unified structure. When the ownership is beyond the
founder/entrepreneur and consists of a sibling group or a cousin consortium,
there is even greater opportunity for misaligned expectations, misunderstanding,
and conflict. The dialogue required for this planning is not always comfortable
or easy. The discussions need to address, among other things, business goals,
business management, ownership, and shareholder expectations.
Even with the best transition plan in place,
however, the plan must be executed. A defined transition plan should be
flexible enough to deal with both current issues and future issues, and yet
detailed enough to provide meaningful guidance for both generations. Both
generations need to execute the plan with a focus on the present and striving
toward a vision of the future.
Creating a collaborative environment between
generations can strengthen relationships and allow the family to capitalize on
their financial, human, social, and intellectual capital. Having a plan in
place and the ability to discuss and implement the plan with the family will
help you in setting the foundation for building a multi-generational family
legacy.
SKM Associates
advising and supporting Families in Business as they build their legacy
Contact SKM Associates
Email: skmoyer@comcast.net
Phone: 215.256.5997
