and leadership in family business succession planning
So, what’s the difference?
Succession planning for you family business is crucial if you want your business to succeed after you’ve retired. However, there’s much more to it than just transferring ownership….
To effectively plan for business succession, you need to make sure you have the three pillars covered…….
Management Succession Planning
For the company to succeed, it needs to operate efficiently. In a family business, similar to most businesses, there are a few main departments. Accounting and Finance, Operations, Client fulfillment, and Sales and Marketing.
Management succession planning is one of the main components of business succession planning. This is where decisions are made about shifting responsibility required to keep the company alive and well preserved during the family business transition.
For management succession planning, we have to consider key management staff members, management skills of the successor, training and shadowing involved and how it will affect the upcoming period of transition.
Management succession planning addresses the more immediate aspects of the succession plan that affect the day to day aspects of the company. Without proper planning and in depth conversations about management, it will be difficult to achieve a smooth succession plan.
Ownership succession planning
Ownership succession planning is when we involve the number crunchers, lawyers and insurance folks.
Unfortunately, this involves pretty tough conversations around money and death.
What Do You Mean?
For example, we need to discuss the structure of the company and how the deal will look as we progress in the business succession plan.
- Who owns the business now
- Who will own it in the future
- How the vision will change
Are all parts of ownership succession planning.
We also need to consider tough subjects like what if the owner (Mom or Dad) gets ill and dies or what if the successor gets in an accident.
This is an essential part of the family succession plan. Despite how difficult this conversation is, it’s important to cover every possible scenario that could affect your business’s succession planning.
What else should we be considering?
It is highly recommended that the successor hires their own advisory team to have a clear and separate perspective from the founder. Sometimes information is overwhelming and emotions can arise, so a personal advisor is vital to the success of the deal.
Business ownership succession planning should have on-going meetings that are as thorough as possible.
Ongoing meetings helps us understand subjects like estate taxes due upon family member deaths.
The conversation will feel dark and heavy at times, but can lower the chances for technical mistakes, planning too late after deaths have occurred or issues with treating children equitably.
Leadership Development Planning
The transfer of leadership is imperative to the successful future of the family business and is a pivotal point in the succession planning of a family business.
Ultimately, our goal is to develop the successor to deliver and improve the company’s performance. By passing on the business to the next generation, we can watch the company blossom and thrive in the hands of people we trust.
By selecting and grooming the right successor to be a great leader..
They will account for the future revenues and profitability of the company, you can ensure your vision lives on.
Secrets To Succession is a book written by first-hand successor, Gerard Gust, who was groomed from a young age to take over the family business. At only 33 years old, he was able to retire his father in half the time they had planned. Gerard shares his own succession process, what works and what doesn’t in order to help other family businesses prepare, implement, and endure the complex family succession process.
“The odds were stacked against us but the strategies shared in this book helped us succeed, and you can do it too!” – Gerard Gust