We are often asked ‘When is the best time to start succession planning?’ and typically our answer is ‘a long time ago’!
More often than not the issue of succession planning is ignored and then only dealt with at a pain point such as the sudden death or a diagnosis of poor health of the owners of the business.
This makes things tricky for you because there may not be the time to be able to put in place what you really want to happen. You’ve got businesses to run, we get that, but at the same time, it is an issue that will need to be dealt with at some point. We think this should be on your terms and with sufficient time to ensure that is as smooth a process as possible.
A report from PwC shows that just 13% of the UK family businesses they surveyed had a robust, documented and communicated succession plan in place, so if you haven’t got one, you are not alone.
That doesn’t mean that you shouldn’t have one though.
Irrespective of your age or how long the business has been running having an exit strategy will help to focus you on what the business needs to provide for you to allow you to have the lifestyle you want to have when you decide to leave the business.
Within a family business there are obviously other things in play and so we appreciate it is not easy in practice, but the sooner you take control of your future the sooner you get back to the day to day stuff.
With that in mind here are 5 common challenges that people in your position face when it comes to succession planning and our thoughts on how to overcome them.
Most of us think we are immortal, or at least think that we have many many years ahead of us. Plenty of time to deal with succession planning. I’ll do it next year, and then when we get to next year it’s the same excuse! Before you know it, you are 10 years down the road and no closer to starting.
Unfortunately, the stats are against us on this one!
Like taxes, some things in life are certain and whilst we don’t know the exact date and time, we know that one day will be our last on this planet.
Knowing that you have a plan in place to deal with that will take a weight off your mind and will ensure that the business you care passionately about is in the best position to deliver a legacy well beyond you.
Discussions around succession can get difficult, you may have to be telling your own children that they are not the right people to take the business forward when you move on.
You may have to listen to your children telling you that they are not interested in taking it on when you leave.
Irrespective of the reason for the difficulty (and there are many!) very few of these discussions will get easier by ignoring them.
Tackling them head on, in the right environment will help. We often suggest that families hold a retreat each year to discuss the long-term strategy for the business. This is usually at a hotel, away from the business and focussed on a specific agenda. Bigger picture stuff.
This works best when an environment is created where people can be honest and express their feelings, difficult but .
You can use this time to discuss your family’s values and what you want your legacy to be.
You can leave the retreat knowing that you are all on the same page.
They are like belly buttons, we all have one and some are bigger than others! Maybe not the best analogy but peoples egos are a challenge we see a lot.
If you have established this business and worked bloody hard to get it to where it is today you will likely have put may hours into the business and have ideas as to how you want it to look in the future.
These ideas may not match those of your successors and so you can be left with a situation where you are thinking you have all the experience and therefore know better, and they are thinking they understand the world today far better than you and their ideas are best.
There is a possibility that you are both right and everyone leaving their ego’s at the door (however big they are) will help to focus on what is best for the business.
These are also things that can be discussed at the retreats.
Loss of Identity
If you have only ever known the family business, if you set it up or have been working in it all your life, it is not uncommon to be afraid of what life might look like away from it.
Instead of being the CEO or Managing Director of a successful business you will be ‘retired’.
This loss of identity can be difficult to accept for some but can be solved by continuing to be involved in the business, albeit in a reduced capacity.
You could become the Executive Chairman and attend board meetings, allowing you to remain involved in the business but also allowing your successors to run the business on a day to day basis.
You may not have as much involvement in the business (we look at this next) but you can retain an identity within it and act as a sage to those tasked with continuing your legacy.
Fear of letting go
You have spent many years growing your business. You have worked long hours through good times and bad times and the business is most likely an extremely significant part of your life.
Letting go of that can be scary. How will you spend your time? There is only so much golf you can play or gardening that you can do.
Passing the business to the next generation can also be a scary prospect, if they fail you may feel you could have done more, if they flourish you may be proud of them but also your ego may take a dent.
Giving up your position in the family business can make you feel as though you are also giving up your position in the family. If you are the business founder and are seen as the head of the family, it can be very difficult to take a back seat and watch the next generation take on these roles, either in reality or in your own perception.
To overcome this we recommend spending some time understanding what you could do outside of the family business to give you a sense of purpose. This may be acting as a mentor to students, it may be becoming involved in charity work, it could simply be to spend more time with your grand kids and to do all the things you have ever wanted to do but have not had the time to do them because you have been working so hard.
Doing this and then focussing your plan helping you to achieve this not only helps to prepare you for life outside the family business but it also acts as inspiration to those still working in the business.
If they can see that you are ‘living the dream’ and reaping the benefits from all your years of hard work, they will know that it is a possibility for them.
We are only here once and we can’t come back next time and do all those things that we promise ourselves we’ll do.
You don’t want to be sat in your rocking chair one day thinking ‘I wish I’d…’ especially as you have the chance to make your dreams a reality.
If the answer to the question of when is the best time to start your succession planning is ‘a long time ago’ the second best time to start is today! We are here to help. Click here to contact us
If you want to know how to start succession planning, click here