At some stage, all companies need to consider what happens when the current generation of owners retires or wants to step aside but this can be particularly emotional and difficult when that business is a family business.
One of the many benefits of being part of the family business community is sharing experience and ideas with like-minded people. Here we explore a few things that those businesses will need to consider.
The first step can be the most challenging, so you should consider holding a family meeting to discuss the future of the business. Think about the timing and venue carefully. If discussions prove difficult it may be helpful to engage a third party, such as a family business consultant, who can help to facilitate a dialogue.
Invite the whole family to participate in the process, not just those directly involved in the business. The views of family members who don't work in the business can be just as important and influential as the views of those that do. Make sure everyone has a say.
Passing the business to the next generation of the family might not be the best option either for the family or the business. Have you considered other alternatives? Selling the family business to its manager(s) or on the open market may be possibilities.
Work with the whole family to agree and prepare a clear plan which identifies and reconciles the strategic future of the business with the needs and goals of the family.
Many outgoing generations will go through the motions of succession planning but evade the real issues. Success will depend on genuine engagement with the process, particularly from the owner-manager of the business.
Experienced family business consultants can help to facilitate meetings, engage reluctant family members and prepare a shared succession plan. Once the plan is agreed, the family will almost certainly need help from a team of professionals, perhaps including family business advisers, accountants, solicitors and surveyors. The right advisers should not only understand the relevant legal and technical issues but also have a rich understanding of the emotional context in which the succession planning process is taking place.