Plan to pass on business essential
December 16, 2013
I received an interesting article a couple weeks ago. The article talked about the family affair of owning a business; learning who the boss is, and how the next ones in line can or cannot be successful.
SAN ANGELO, Texas — I received an interesting article a couple weeks ago. The article talked about the family affair of owning a business; learning who the boss is, and how the next ones in line can or cannot be successful.
As entrepreneurs, we develop an idea that we are passionate about and assume our family members feel the same. Unfortunately, according to this article, 27 percent of non-related key employees will share the same business passion versus 13 percent of our children.
Keeping this in mind, it might be a little discouraging to start a business that might not make it pass the first generation. Instead of seeing this as a negative, maybe taking action now can save your business.
Developing a succession plan should be part of any business growth strategy. The truth is, none of us are eternal and having a succession/exit plan is important for the business.
Large companies have the convenience of having executives prepared and ready to step in to fill top leadership roles, while smaller businesses usually do not. In a family-owned business the primary owner/president of the company typically plays the largest role in the company, and has a greater portion of the responsibility. Therefore, their absence can be the trigger to many business problems.
As a good leader and business owner you must have self-awareness and forethought when it comes to the longevity of the company. One of the greatest legacies of an effective leader is to have great people on staff who can take over when he or she is gone and the self-awareness to be prepared for it to happen someday.
Another important part of the succession planning process is periodically evaluating the plan and changing it accordingly. Generations change, and people change. Therefore, as you go from one generation to the next, think about how future family members/relatives will work together. These dynamics are often instructive for small business success. The future successors ambitions may create an engaging level to help the business thrive — or may stir up family tensions that can blindside business success.
There are many challenges and they don’t always come from the business or the customers, but instead from the succession line. Therefore, having a well-developed plan for the future of the business is important. Some elements considered key in planning business succession are:
Choosing a viable successor
If it’s going to be your own children, educate them early on about the family business to create an attitude of ownership. But, if this is not the case, then evaluate carefully and objectively the strengths and weaknesses of any prospective candidate.
Mentoring is the key
Create a personal development plan for potential successors. Ideally, owners should prepare successors over several years allowing them to be involved in different areas of the company, getting to know important business contacts, and possibly be responsible of key business decisions.
Keep all employees informed
Having everyone in the loop will facilitate the transition for the new successor.
“Business Tips” was written by Adriana Balcorta Havins, Business Development Specialist of Angelo State University’s Small Business Development Center. Contact her at Adriana.Balcorta@angelo.edu.