One reason so many enterprises ignore succession planning is that it can be uncomfortable.Family conflicts occur even in the healthiest businesses, and the succession process is full of potential pitfalls and mental roadblocks unless you know what you are doing.Why do so many family businesses ignore or put off succession planning? First, many people underestimate how extensive succession planning is.
It is up to you whether you create a successful multigenerational family business.
In other words, this is not a numbers game, it is a planning game.
It is uncomfortable and unproductive whenever the current patriarch or matriarch runs an entire meeting only to find out later that many people wanted to offer constructive thoughts, except they did not feel comfortable doing so.
If you have an expert trusted adviser (or better still, a family business adviser) I strongly suggest you ask them to facilitate these meetings.
The reason so few family businesses survive to the third generation is they lack planning and communication. Every family business is different, but the characteristics of good succession planning are universal.
Companies fail when they let family conflict and emotion drive change, rather than relying on proven strategies. Here are six simple steps that your business should incorporate.Specifically, FBA shows that transitioning business owners are concerned about: You also need time to figure out the legal and tax issues associated with succession and, if it is the right time for the founder, retirement. Strong family businesses create a sense of shared values — the kinds of values that survive beyond one owner.As you sit down to prepare a succession plan, take note of the moral and governing philosophies that guide your enterprise. During times of conflict or struggle, your leadership and family employees will rally around your family values, using them as a guidepost for making tough decisions.It is about ensuring that there is a solid pipeline of talent in the company that can address the needs for filling critical positions.In the GCC, succession planning is extremely relevant, with many studies reporting that family businesses often fail before the third generation.A family business ignoring its succession plan is akin to a 30-year-old worker ignoring his retirement plan.Both events (succession and retirement) seem like they are a long way off, but the reality is that ignoring the early years can lead to major problems down the road.The data is not pretty — although, as some critical thinkers have pointed out, survival statistics like these have to be put into context from time to time.What is important to know is the data does not imply there is a 90% chance your business will fail before your grandchildren come of age.Too many families treat succession like it is a long-off, lofty goal.They think “someday, the children will have to take over,” or “ideally, the business will operate smoothly enough for my son/daughter to grab the wheel”.