“Often, all that stands between you and what you want is a better set of questions”. – Tim Ferriss
How do you eat an elephant? The phrase “succession planning” means different things to different people. Often, it’s misrepresented as simply having a buy-sell, or confused with having a basic estate plan. In our forty years of experience, we have identified many more factors involved than the surface-level perceptions.
These factors are all interrelated and can be broken down into three general areas of family, business management, and most importantly, the owner’s role and motivation. Over the next few months I will explore each of these factors, which we refer to as the Succession Matrix®, in hope of shedding light on both the complexity of succession planning, and how the process can be navigated successfully when broken down into workable pieces. Let’s eat the elephant one bite at a time.
If you’re a business owner, let me begin with letting you know, we’ve been where you’re going before. And in our experience, it all starts with motivation and perspective. Some questions to consider: Do you feel a stewardship responsibility to your employees and their families? What about the community in which you do business, or your suppliers, vendors, and manufacturers? If so, how much are you willing to sacrifice to ensure your business thrives through the next generation?
Clarifying your business vision is critical to those who depend upon your business. Your family, management team, and employees look to you for leadership. Creating a sharply focused vision of your business requires working on the business instead of in the business.
Devoting the time and energy to ask and attempt to answer uncomfortable questions is essential such as: What would happen to your business if you got hit by the proverbial bus today? Who would step-up into a leadership role tomorrow?
Do you have an identified successor in place, and if you do, what do your key managers think about your successor? Will they support him or her, or leave the business at their first opportunity? Is your bench strength strong enough to withstand the unexpected transition of leadership?
What about your ownership structure? Does your significant other feel comfortable in a role as sole owner? Is there a support structure in place to help guide them through uncomfortable terrain, while maintaining their standard of living?
Are your children a part of the business? If so, will they share in ownership equally, and is this a sustainable scenario? Have you communicated your vision with them and are they bought in? Do you have the governance structure in place to facilitate agreements between them to preclude disagreements?
These are just a few of the many questions to consider and they can appear overwhelming, even more so when we factor in family emotions with the business dynamics. Over the next few months we will explore these considerations in detail in hope of gaining ground between what stands between you and the vision for the future.
Dan Iosue is an Associate of The Rawls Group, a business succession planning firm. Dan specializes in dealing with the issues that must be resolved by business owners to implement succession strategies geared towards building business value. For additional information, visit www.rawlsgroup.com or call 407-578-4455
Preparing a business to transition from one generation to another requires a focus on 10 key areas which we call the Succession Matrix. Click the following link for more drill down resources on The Succession Matrix