Succession planning is often the most taxing challenge for family owned businesses. Our research shows that, alarmingly, only 4% of family businesses have full, communicated and detailed succession plans.
With no plan, there is a danger that the business will be lost or permanently damaged if something suddenly happens to the founder such as long term illness or even death. It is the founder who knows the where all the money and assets are, who knows the strengths and foibles of the operation and who has the close relationships with clients and customers. So avoiding an ‘overnight’ transition of ownership is in everyone’s interest and any perception of doubt about the future can be alleviated by planning, starting with identifying a successor.
An early start to the succession process gives the opportunity to identify the right candidate and not just the most likeable. The new owner must share the passion for the business and its future and show a desire to nurture it and grow it. It also allows time to identify strengths and weaknesses and to ensure the new owner has the hard skills of financial competence, leadership, decision-making and risk management alongside soft managerial skills such as people management, communications and interpersonal relationships.
Experience of working on other business environments and even in different sectors can benefit the range of knowledge and expertise available to the new owner and this can help win the respect and approval of the workforce.
It is also critical that this process manages the expectations not only of the succession candidate in terms of responsibility and performance accountability, but of the rest of the family who may be working in the business and other employees who want to see managerial competence and confidence in the future coupled with equitable remuneration for all concerned.
Every family business is unique and each requires different solutions to the challenges they face that are tailored for their individual needs. Our new 360 degree business review service Family Business Connect has been specially designed to assist family and owner managed businesses access understanding, support and guidance.
To begin to look inside your business with a little more clarity and confidence, now and into the future, get in touch with one of our Family Business advisers at PKF Francis Clark and arrange your initial Family Business Connect Review.