Succession Planning FAQs
Have questions about succession planning? You’re not alone. Below are answers to some of the most common succession planning FAQs. Whether you’re just starting or already have a plan in place, these questions cover the key areas our family business advisors are asked regularly.
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- Automotive Succession Planning
- Automotive Succession Planning for Dealer Groups
- Business Growth Strategies
- Company Exit Strategy
- Dealer Readiness FAQ
- Family Business
- Family Business Advisor
- Fuel and Energy
- Multi-Unit Franchisee
- Succession Plan
- Succession Planning Framework
Strategic planning supports business growth strategies by providing clarity about where the company is going and how it will get there. Effective strategic planning defines priorities, allocates resources, establishes performance metrics, and aligns leadership teams around long-term growth objectives.
Operational excellence is essential for business growth strategies because inefficient operations limit a company’s ability to scale profitably. When businesses improve processes, technology systems, and performance metrics, they create the foundation necessary for sustainable growth and expansion.
Leadership teams play a critical role in executing business growth strategies because growth requires strong decision-making, accountability, and operational leadership. Companies with aligned leadership teams are better positioned to implement expansion plans, improve performance, and maintain momentum during periods of change
Effective business growth strategies can help a company grow without taking on too much debt by focusing first on operational efficiency, profitability improvements, and strategic partnerships. Businesses often strengthen cash flow through process improvements, leadership development, and incremental expansion before leveraging debt for larger opportunities. This disciplined approach reduces financial risk while still supporting sustainable growth.
Business growth strategies help future-proof a company by preparing the organization for market changes, leadership transitions, and economic uncertainty. Businesses often strengthen resilience by using scenario planning, diversifying revenue streams, developing leadership depth, and aligning long-term strategic planning with succession goals. These strategies allow companies to adapt while maintaining consistent growth.
Yes, business growth strategies can significantly increase the value of a business before selling. Buyers place higher valuations on companies with strong leadership teams, scalable systems, consistent profitability, and clear strategic direction. Implementing effective business growth strategies before a sale helps ensure the company is transferable, resilient, and attractive to potential buyers.
Business growth strategies can feel harder to execute in family businesses because family relationships often influence leadership decisions, capital allocation, and long term planning. Without clear governance, role clarity, and succession alignment, growth initiatives may stall due to conflicting expectations among family members or key leaders. Strong governance structures and leadership development can help family businesses implement growth strategies more effectively.
Effective business growth strategies can help a company grow without taking on too much debt by focusing first on operational efficiency, profitability improvements, and strategic partnerships. Businesses often strengthen cash flow through process improvements, leadership development, and incremental expansion before leveraging debt for larger opportunities. This disciplined approach reduces financial risk while still supporting sustainable growth.
The best time to start business growth strategies and succession planning is long before an ownership transition becomes urgent. Starting early allows owners to align leadership development, operational improvements, and market expansion with long term succession goals. When business growth strategies and succession planning are aligned, companies typically experience stronger valuation, leadership continuity, and fewer transition risks.
The best business growth strategies for capital-intensive businesses depend on your market position, capital availability, and long-term vision. Many successful companies pursue strategies such as strategic acquisitions, geographic expansion, operational efficiency improvements, and partnerships that leverage existing infrastructure. The right business growth strategy balances opportunity with capital discipline so the company grows without overextending resources.
Legal documents that support a business succession plan include buy-sell agreements, shareholder agreements, trusts, wills, operating agreements, and governance policies that define decision rights, ownership transfer, and contingency protocols.
The right time to start a succession plan is well before a transition is expected, often 5-10 years in advance, so leaders can be developed, governance can be aligned, and ownership structures can be optimized.
Creating a succession plan should involve business owners, family members, key executives, and professional advisors such as CPAs, attorneys, wealth managers, and succession planning specialists. Aligning these stakeholders ensures financial, operational, and relational continuity.
The essential documents for a succession plan include shareholder agreements, buy sell provisions, trusts, wills, employment and compensation policies, decision-rights schedules, and a written succession plan with defined development milestones.
The difference between succession planning and succession management is that succession planning is strategic and long-term, while succession management is tactical and focused on day-to-day talent pipelines and role coverage. Both are necessary for continuity.
A succession plan can increase valuation because buyers, lenders, and partners place higher value on businesses with leadership depth, strong governance, and predictable performance.
A succession plan should be updated at least annually, and more frequently after major changes in ownership, leadership, family dynamics, or business strategy. Regular updates ensure the plan remains aligned with current conditions.
Succession planning can reduce family conflict by establishing governance, clarifying roles, and setting transparent expectations around ownership, compensation, and leadership. A structured and facilitated process helps prevent misunderstandings and emotional decision-making.
See Succession Planning Framework
To pick the right successor, business owners should evaluate candidates using BASKE (Behavior, Attitude, Skills, Knowledge, Experience), while providing coaching, role rotations, and P&L exposure to build readiness. Aligning decision rights and accountability ensures the successor can lead effectively.
The difference between succession planning and an exit strategy is that an exit strategy focuses on the owner’s departure and liquidity, while succession planning ensures the business continues to perform before, during, and after any transition.
Succession planning is not only for retirement; it is designed to prepare a business for leadership changes during growth, acquisitions, health events, or unexpected disruptions. Succession planning is about continuity and preparedness, not just departure.
You should start succession planning as early as possible, ideally years in advance, to allow time to prepare successors, align governance, and structure ownership effectively. Early planning expands options, strengthens leverage, and reduces the risk of rushed decisions.
See Succession Planning Process
A succession plan is a comprehensive strategy for leadership and ownership continuity, and every business owner needs one to protect enterprise value, retain key talent, reassure lenders and partners, and ensure the business performs through change.
See What Is a Succession Plan?
A company exit strategy should include contingency planning for unexpected events such as illness, disability, market disruption, family conflict, or the sudden loss of a key leader. This includes identifying interim decision-makers, documenting authority, protecting lender and vendor confidence, and preparing leadership continuity so the business can remain stable if the owner exits sooner than planned.
Family dynamics can significantly impact a company exit strategy because differing expectations, roles, and perceptions of fairness can influence ownership decisions and leadership transitions. A company exit strategy must address family communication, governance structures, and clear role definitions to prevent conflict. Aligning family members early helps ensure the exit supports both business performance and family relationships.
A comprehensive company exit strategy should include financial independence planning, business valuation readiness, leadership succession, ownership transfer structure, tax and estate planning, and contingency planning. A strong company exit strategy also addresses governance, decision-making authority, and the long-term sustainability of the business after the owner exits.
Deciding whether to sell, transfer, or step back gradually in a company exit strategy depends on your financial goals, leadership bench strength, and long-term vision for the business. A company exit strategy should evaluate whether internal successors are ready, whether the business is transferable, and whether market conditions favor a sale. Many owners choose a phased transition to balance income, control, and continuity.
Yes, a company exit strategy can allow you to leave your business without selling it by transitioning ownership or leadership to family members, key managers, or an internal team. Options such as management buyouts, family succession, or phased ownership transfers can provide liquidity and continuity without a full third-party sale. A well-designed company exit strategy ensures the business continues to perform even after the owner steps away.
The best time to sell a business in a company exit strategy is when the business is performing well, leadership is stable, and market conditions support strong valuation. A well-timed company exit strategy is proactive, not reactive. Owners who plan early can align growth, succession, and financial independence to exit on their terms rather than being forced by health, market shifts, or internal challenges.
If you delay creating a company exit strategy, you increase the likelihood of being forced into reactive decisions during a health event, market disruption, or family conflict. A delayed company exit strategy often leads to lower valuation, leadership instability, and strained relationships among stakeholders.
The most common options in a company exit strategy include selling to a third party, transferring ownership to family members, executing an internal buyout with key managers, transitioning to a lifestyle ownership model, or liquidating the business. Each company exit strategy option has different implications for control, liquidity, taxes, and continuity, so owners should evaluate them based on their long-term goals and the readiness of the business.
Yes, a company exit strategy can allow you to exit without selling your business by transitioning leadership while retaining ownership. Many owners choose to hire a professional CEO, elevate a key manager, or move into an advisory or board role. A successful company exit strategy in this scenario requires clear decision rights, strong leadership continuity, and a personal financial plan that reduces dependence on the business.
You should start planning your company exit strategy at least 5–10 years before your intended transition. A long runway allows time to strengthen financial performance, develop leadership successors, and implement tax and estate strategies that support your goals. Starting your company exit strategy early gives you flexibility and control, rather than forcing decisions under compressed timelines.
A company exit strategy is a plan for how and when you will transition out of leadership, ownership, or both, whether through a sale, succession, or stepping back from day-to-day operations. Every owner needs a company exit strategy to protect business value, reduce conflict among stakeholders, and ensure continuity of leadership and performance. Without a defined company exit strategy, owners risk leaving critical decisions to timing, emotion, or external pressure rather than executing a controlled transition.
You need a family business advisor if your primary challenges involve communication, governance, or role clarity within the family. If your needs extend to leadership readiness, growth alignment, and coordinating multiple advisors, then a succession planner may be the next step. Many businesses start with a family business advisor and expand into full succession planning over time.
A CPA or attorney can support parts of a family business advisor’s role, but they typically focus on technical areas such as tax and legal structure. A family business advisor coordinates those technical elements with family dynamics, leadership development, and strategic planning to ensure all aspects of the business are aligned.
You should hire a family business advisor when governance, communication, or role clarity issues begin to impact the business. A family business advisor can help immediately with alignment and structure, while broader succession planning typically begins 5–10 years before a transition to ensure leadership readiness and long-term continuity.
A family business advisor differs from a consultant or succession planner in scope and approach. Consultants often focus on a specific issue, such as conflict resolution, while a family business advisor focuses on governance and alignment. A succession planner builds on that foundation by connecting all areas that impact continuity, including leadership, strategy, ownership structure, and long-term planning.
Family business advisors who focus on succession planning help prepare successors, strengthen leadership teams, and align advisors around a coordinated plan. A family business advisor working in succession brings together governance, leadership development, and strategic planning to ensure the business can transition successfully across generations.
The difference between a family business advisor and a succession planner is that a family business advisor focuses on governance, communication, and family alignment, while a succession planner integrates those elements with leadership development, strategic planning, tax and legal coordination, and long-term continuity. Both roles are important, but they operate at different levels of depth within the planning process.
A family business advisor helps guide governance, communication, and relationships within a family enterprise. A family business advisor is especially valuable when roles, expectations, or decision-making authority are unclear, helping families align around structure, accountability, and long-term business performance.
If a fuel business owner dies or becomes incapacitated without a continuity plan, the business may face immediate operational disruption, regulatory risk, lender concerns, and potential loss of customers. Succession planning prevents this by establishing interim leadership roles, decision-making authority, and contingency plans that allow the business to continue operating without interruption.
Regulations affect exit timing for fuel, heating oil, and biofuel companies by influencing licensing requirements, environmental compliance deadlines, and lender or insurer expectations. A well-structured succession plan aligns exit timing with regulatory readiness, ensuring transitions do not trigger compliance issues, penalties, or disruptions in operations.
Preparing next-generation leaders in a fuel or propane business requires more than office-based training—it involves hands-on experience across operations, compliance, customer relationships, and financial management. Effective succession planning develops leaders through real responsibility, cross-functional exposure, and coaching so they can earn credibility with drivers, technicians, vendors, and regulators.
To start succession planning for your fuel or energy business right now, tools like the Business Growth & Continuity Scorecard can help you evaluate risks, test “what if” scenarios, and identify gaps in leadership, operations, and continuity planning.
Regulations play a critical role in succession planning for fuel, heating oil, and biofuel companies because agencies such as the EPA, DOT, OSHA, and state licensing bodies require operational continuity and accountability. Succession planning ensures that compliance responsibilities are clearly assigned and maintained, giving regulators, lenders, and insurers confidence in the business during a transition.
The biggest risks of avoiding succession planning in a fuel or energy business include distressed sales under pressure, loss of key customers and vendor relationships, family conflict over ownership, lender or regulatory non-compliance, and reduced enterprise value. In asset-heavy, compliance-driven industries like fuel and propane, these risks can escalate quickly without a clear continuity plan.
Succession planning for a fuel or propane business helps retain drivers, service technicians, and managers by providing clarity, stability, and opportunity during a transition. Defined roles, incentive plans, leadership pathways, and transparent communication reassure employees that their careers are secure and the business will continue operating successfully.
When an owner leaves a fuel, propane, or heating oil business without succession planning, critical assets such as fuel contracts, delivery routes, and regulatory licenses may be disrupted or lost. A structured succession plan ensures DOT, EPA, and state licensing requirements continue without interruption, while preserving customer relationships, vendor agreements, and operational continuity.
Yes, succession planning for a family-owned fuel or energy business can include transitioning leadership to non-family members such as key managers or external executives. Many propane, heating oil, and fuel delivery companies choose this path to preserve operational strength while maintaining ownership. A well-structured succession plan ensures flexibility so owners can choose the best leadership model without disrupting operations.
Succession planning for a fuel or energy business should involve owners, family members (both active and inactive), key managers, lenders, and professional advisors. Many fuel and propane business owners also engage Certified Succession Planners to coordinate estate, tax, leadership, and continuity strategies into one aligned roadmap.
You should start succession planning for your fuel delivery, propane, or oil company ideally 5–10 years before you plan to reduce your role. However, if your business depends heavily on you for customer relationships, regulatory compliance, or financing, succession planning should begin immediately. Starting early creates flexibility, while waiting increases operational, financial, and continuity risks.
Succession planning for a fuel or energy business is different from estate planning because estate planning focuses on transferring ownership after death, while succession planning ensures the business continues to operate successfully during and after a transition. In fuel, propane, and heating oil businesses, succession planning is what keeps drivers on the road, customers served, and operations compliant—while estate planning alone cannot ensure continuity.
Succession planning for a fuel, propane, or heating oil business is the structured process of ensuring leadership, ownership, and operations continue seamlessly when an owner steps back—whether due to retirement, illness, or sale. For energy businesses, succession planning also means preparing for regulatory continuity, maintaining customer relationships, and protecting long-term family wealth in a capital-intensive, compliance-driven industry.
A succession planning framework reduces ownership conflict by establishing clear policies around control, distributions, roles, and communication, aligning expectations across active and inactive owners.
A succession planning framework improves leadership continuity by developing successors over time, expanding leadership accountability, and building a management team capable of operating the business without reliance on a single owner.
A succession planning framework creates clarity for family members and advisors by defining roles, governance structures, ownership expectations, and decision-making authority before transition, reducing ambiguity across stakeholders.
A succession planning framework is not only for large companies; it is most critical for privately held, multi-entity, and capital-intensive businesses where ownership, leadership, and financial complexity must be aligned to sustain performance.
Tools and guides that help build a succession planning framework include the Business Growth & Continuity Scorecard, The Business Owner’s Guide to Growth & Transitions, and the Help, I’ve Got Family in the Business Guide, which provide structured ways to assess readiness and prioritize action.
A succession planning framework is not only for retirement; it is used to strengthen leadership continuity, governance discipline, and strategic alignment during growth, expansion, recapitalization, or unexpected events.
The risks of not having a succession planning framework include leadership gaps, misalignment across ownership groups, loss of key operators, lender or partner concerns, and valuation discounts driven by uncertainty during transition.
The Succession Matrix® fits into a succession planning framework as the 10-factor model that organizes leadership, ownership, governance, financial planning, and strategy into a coordinated system, helping owners prioritize risk and align decisions across the enterprise.
You should start a succession planning framework 5–10 years before a transition to allow time to develop leadership depth, align governance across ownership groups, and structure capital and control effectively. Starting early preserves flexibility and control.
A succession planning framework is important for family-owned, capital-intensive businesses because it aligns family expectations with operational realities, reduces risk across multiple entities, and establishes governance structures that protect enterprise value and continuity.
A succession planning framework is a structured system that aligns leadership, ownership, governance, and capital strategy so a complex business can perform through transition. For capital-intensive and family-owned enterprises, it integrates family dynamics, decision rights, and long-term continuity into one coordinated approach.
Yes, a multi-unit franchise group can be sold to private equity or rolled up into a larger operator as part of a succession or exit strategy. These transactions can provide liquidity and growth capital, but they require strong financial performance, scalable systems, and leadership continuity to achieve favorable valuation and terms.
Franchisors play a critical role in multi-unit franchise succession planning because they often have approval rights over ownership and leadership transitions. Franchisors evaluate whether successors can maintain brand standards, operational performance, and financial stability, making early engagement and preparation essential.
Choosing between family successors and operational leaders in a franchise business depends on capability, readiness, and alignment with franchisor expectations. Multi-unit franchise succession planning often separates ownership from management, allowing qualified leaders—whether family or non-family—to run operations while ownership remains within the family.
Preparing a successor for franchisor approval in a multi-unit franchise business requires a multi-year development plan that includes cross-functional training in operations, HR, and finance, along with mentorship and direct exposure to franchisor leadership. Documenting performance and building credibility with employees and brand partners is critical to gaining approval.
Read more: Avoiding Leadership Gaps Across Franchise Locations
Multi-unit franchise succession planning should involve owners (both active and inactive), key managers and regional leaders, franchisor representatives, and professional advisors such as CPAs, attorneys, wealth managers, and Certified Succession Planners. A coordinated approach ensures all elements—financial, operational, and relational—are aligned into one clear roadmap.
Read more: Family-Owned Franchise Groups: Navigating Growth and Succession Together
The biggest risks of not having a multi-unit franchise succession plan include franchisor rejection of successors, family conflict or deadlock, key manager turnover, lender concerns, tax inefficiencies, and valuation discounts during a forced or rushed sale. Without a plan, issues in one unit or leadership layer can cascade across the entire portfolio.
If you are not ready to exit, you can gain freedom as a multi-unit franchise owner by transitioning from operator to strategic owner. This involves building regional leadership, standardizing SOPs, installing performance dashboards, clarifying decision rights, and focusing your time on growth, capital allocation, and franchisor relationships rather than daily operations.
Read more: How to Transition from a Multi-Unit Franchisee Operator to Strategic Owner
Private equity can be a good option for multi-unit franchise succession planning if your business has strong systems, consistent margins, and leadership depth. Private equity can provide liquidity and fuel expansion, but it also introduces ROI pressure and potential cultural shifts. Many owners retain minority equity to preserve long-term upside while accessing growth capital.
Read more: What Private Equity Wants in a Multi-Unit Franchise Sale
Preparing your family for multi-unit franchise succession planning requires clear governance, defined expectations, and structured development. This includes setting employment rules, compensation standards, and shareholder expectations, while creating development tracks such as brand training and cross-functional rotations. Regular family council meetings help maintain alignment and prevent conflict.
Read more: How to Prepare Your Family for Multi-Unit Franchise Succession
You should start multi-unit franchise succession planning 5–10 years before stepping back or selling. Franchisors require evidence of successor readiness, lenders expect continuity, and family members and managers need time to align. Starting early expands your options, strengthens leverage, and reduces the risk of rushed or value-destroying decisions.
Read more: Multi-Unit Franchisee Exit Strategy Options
Multi-unit franchise succession planning is more complex than single-unit ownership because you are managing an enterprise with multiple markets, regional leaders, lenders, real estate entities, and franchisor relationships. A gap in one area can ripple across the entire portfolio, which is why a holistic framework, integrating leadership, governance, estate planning, and brand compliance, is essential.
Read more: What Makes Multi-Unit Franchisee Succession Planning So Complex
It’s the structured process of preparing your dealership for leadership and ownership transition. It aligns OEM approval, family governance, and successor development. If you’re new to the topic, start with Succession Plan: How to Prepare Your Business for the Future.
Auto retail faces unique challenges: manufacturer approval, real estate structures, and family involvement. A generic plan misses these nuances. Read Succession Planning for Family Businesses: What Makes It Different to see why customization is essential.
Because no matter what’s on paper, the manufacturer decides who can operate the franchise. Understand the details in What Auto Dealers Need to Know About OEM Approval for Succession.
Ideally 5–10 years before transition. This allows time for successor training, governance, and OEM approval. Don’t wait—see why timing matters in Why Dealership Owners Delay Succession (and the Price They Pay).
Family conflict, OEM rejection, loss of key managers, and reduced valuation. Get a full breakdown in Succession Planning Mistakes That Put Your Dealership at Risk.
Exit planning focuses on the transaction; succession planning focuses on continuity. Compare both approaches in Exit Strategy vs. Succession Plan: Which Path Is Right for Your Dealership?
Dealer principal, family, key managers, OEM reps, and advisors. Explore how structure supports collaboration in [Family Governance in Succession Planning].
It requires years of cross-department training, financial literacy, and OEM exposure. Use the Build a Successor Development Plan for Your Family Business guide as a roadmap.
They stabilize operations and relationships during transitions. See how to retain and empower them in How to Build Leadership Bench Strength in Your Dealership.
Successor readiness affects manufacturer approval because OEMs look for demonstrated leadership capability, operational understanding, and decision-making maturity. Clearly defined development paths and documented readiness help manufacturers see that successors are prepared to lead responsibly and protect the brand.
Dealer principals, next-gen leaders, GMs, and key executives all benefit. Readiness improves fastest when ownership and leadership share clarity.
The Dealer Growth & Continuity Scorecard provides a fast, objective snapshot of leadership strength, alignment, and organizational resilience.
Margin normalization, capital constraints, and leadership bandwidth are converging. Dealer groups that strengthen internal structure and alignment early move faster and maintain optionality as conditions change.
Traditional automotive succession planning often focuses on ownership transition. Dealer readiness applies succession principles to performance today, improving leadership capacity, clarity, and organizational resilience long before a transition occurs.
Dealer readiness refers to leadership depth, alignment, and continuity that allow a dealership to perform consistently under pressure. It focuses on strengthening the organization so decisions are clear and execution does not depend on a few individuals.
Tools that help dealer groups assess leadership and continuity readiness include the Dealer Growth & Continuity Scorecard, leadership assessments, and structured alignment evaluations. These tools surface gaps in leadership depth, decision authority, successor readiness, and organizational stability—often before those issues show up in performance.
Alignment plays a critical role in dealership continuity and growth because it accelerates decisions, reduces internal friction, and keeps leaders moving in the same direction. When owners, family members, and key managers are aligned on priorities and authority, dealer groups protect performance during disruption and create capacity for intentional growth.
You know your GM, controller, or next-gen leader is ready for more responsibility when they consistently execute, demonstrate sound judgment under pressure, and reduce dependency on the owner. Leadership readiness shows up through clear decision-making within defined authority, cross-functional trust, and the ability to stabilize others during change.
Dealer groups prepare for 2026 pressures by clarifying leadership roles, strengthening bench strength, and aligning decision-makers around shared priorities. With margin normalization, higher-for-longer rates, OEM expectations, and consolidation accelerating, leadership readiness—not market prediction—determines whether dealerships react under pressure or execute with confidence.
Dealership succession planning for dealer groups is a leadership and continuity strategy focused on aligning owners, family members, and key managers while strengthening leadership depth across the organization. For multi-rooftop dealer groups, it’s not just about ownership transition or exit—it’s about ensuring clear decision-making, operational stability, and organizational resilience so the business performs and grows through change.
Transition planning is one part of a broader succession plan. While transition planning addresses the practical and emotional aspects of stepping out of a role—like shifting day-to-day responsibilities, coaching successors, and maintaining stability—succession planning includes all of that plus estate planning, governance, ownership transfer, family alignment, and long-term business strategy.
It should include leadership development, estate and tax planning, family governance, ownership transfer strategy, and a communication plan.
Ideally, 5–10 years before a leadership transition. Early planning provides time to develop successors, align the family, and address financial and legal issues.
It goes beyond business operations to address family dynamics, governance, inheritance, and emotional readiness—making it much more complex.
Common reasons include poor communication, undefined roles, emotional conflicts, lack of successor development, and no clear written strategy.
Family succession planning is the process of transitioning leadership and ownership of a family-owned business across generations. It addresses both business needs and family relationships to ensure continuity and harmony.
Creating a succession plan that will be followed through with is a team effort involving you, your family and any other business partners. Engage your family in this process and develop an “our,” rather than a “my,” succession plan. To do this you need to show your family/partners the fundamental respect of asking what they want and begin developing a plan around those issues upon which you can progressively find agreement.
By including your family and business partner’s thoughts, feelings, input, and feedback into the succession plan, you will greatly increase the chance that it will be followed when you are no longer around to enforce it.
If you want your family business to survive for the long haul, it is vital to work on your family issues. The simple reason some families seem to navigate tumultuous waters with relative ease is they diligently engage with each other. Connectivity is the key for smooth sailing, no matter what happens. Families who spend time together, develop a great deal of flexibility, are not rigid in their roles and patterns; they generally give each other the benefit of the doubt; and they have developed healthy communication patterns. There really is no magic to it. It’s just plain old hard work.
If your family and managers seem to be at odds with each other, the first step to improving harmony is to evaluate family member perks, accountability and allowances in the business.
For example:
- Do they get to come in late
- Extra vacation time
- Higher pay for less responsibility
- Promotions that aren’t deserved
While you may be trying to “take care of your family”, you are actually creating an environment of resentment between staff and your family. Implementing a Family Member Employment Policy and Family Member Performance Expectations will get you on the right path for aligning family behavior to management expecations.
If family members are earning their keep, just like everyone else. and an employee still has problems respecting them, the employee may not be the right fit for your company culture.
Succession correlates to a relay race:
- There must be a commitment to preparation
- The runner must place and release
- The relay runner must aggressively take the baton with a commitment to win.
When you have no available family successor willing to run with the baton, it can be passed off to your key managers who you can utilize as a succession bridge. This succession bridge keeps the door open for any younger family members who, over time, develop the desire to work in and eventually lead the family business. The other option you have is to sell the business to your key managers, employees, or a third party. Succession planning will prepare you for any of these options.
This is a great problem to have! This is a huge decision, so we recommend that it is not hastily made.
When you have more than one capable successor, especially if they are family members, one of the best things to do is establish a well thought out curriculum for each candidate which clearly lays out the expectations and requirements necessary to someday lead the business. Once the curriculum is developed and effectively communicated, it is up to the successor to meet the performance expectations and training requirements of the curriculum.
Giving your successor candidates feedback on a consistent basis is important as it will provide coaching opportunities along their journey. After a period of time, have the potential successors, senior leaders, their peers and select direct reports assess each candidate’s strengths and weaknesses. What you are likely to find is that not everyone is willing to pay the price and make the sacrifice.
In the event there are multiple successors still in the running, develop an enhanced leadership development curriculum and let the cream rise to the top. If the strengths and weaknesses of the candidates compliment each other, an option may be that they share responsibility.
It is imperative that you do what is in the best interest of the company, even if it is not necessarily what might be the most popular decision among your family. Choosing one family member over the other or choosing a 50/50 Co-Ownership are both very delicate circumstances requiring deliberate action to ensure smooth sailing. Remember, there is no business gain worth a family loss.
The best time to begin succession planning for any business is when the business plan is created. Knowing this isn’t the case for most business owners, the next best time is now. Just as you are continually working on plans to make your business successful, you should also be working on plans that will provide for continuation of that success.
Succession planning is not about you leaving the business; it’s about building a foundation of success today that will provide the opportunity for future generations. Before making the next purchase or striking the next deal to grow your organization, you should ask yourself the following questions:
- Do I have the full support of my management and leadership?
- Do I have the excess capital and resources that growth requires?
- Do I have the confidence that my successors could manage what I’m building in my absence?
The questions surrounding growth can all be answered through succession planning to ensure your growing in the right direction.
The bottom line answer is YES, because succession planning builds business value. Prospective buyers, banks, Wall Street and estate tax auditors all recognize that business value is dependent upon the predictability that the earnings will continue after a transfer of ownership occurs, whether by sale, gift or estate bequest. These same parties also understand that value is not all about today’s earnings. Any improvement you can make in the 10 different perspectives of the Succession Matrix® will build value in your business. Ultimately, the work you do in building a foundation today for the success of tomorrow, builds value and will put more cash in your pocket when you sell the business.
The key areas that should be addressed in your succession plan, which as a whole are referred to as the Succession Matrix are: Personal Financial Planning, Business Structuring, Business Performance, Strategic Planning, Leadership & Management Continuity, Successor Preparation, Management Synergy & Teamwork, Family Governance, and Family Dynamics.
These ten factors significantly impact each other. Issues in one area can greatly impact the others. For example, an entitlement issue with one of your employed family members is a Family Dynamic and Governance issue. Assume the issue is resolved, they may now be considered a successor candidate (Successor Preparation), your managers who had begun to resent your child may take on a more positive, team oriented attitude once they see the changes in your child (Management Synergy & Teamwork), and you may decide to leave more of your estate and business to them (Personal Financial Planning).
While the main purpose of succession planning is to ensure the continuation of business success, succession planning brings along many other benefits. Additional perks of succession planning can include higher personal financial security outside of the business, better family relationships, less family and business stress, improved employee and management retention, and increased performance and profits.
Your accountant and attorney provide critical expertise and should be an integral part of your succession planning team. However, few attorneys and CPAs have developed a full understanding and are comfortable with facilitating highly emotional and interpersonal management and business issues. In addition to estate planning and business structuring, your business is vulnerable to issues related to family dynamics, business performance, management teamwork, leadership continuity, strategic planning and successor preparation.
A succession planner provides extensive experience in uncovering and addressing mine fields in any area that could impact the current and future success of your business. They provide a creative problem solving perspective to your team that unites the technical, emotional, interpersonal, family, management, and business issues into workable solutions towards your end goal.
A critical component to succession planning, is teamwork. As a result, a succession planner strives to ensure your CPA, attorney, family and management are all working in harmony to achieve your goals.
Having an exit strategy and your estate plan in order is a great first step to succession planning. However, your business’ future success is dependent upon addressing issues from 10 different perspectives. Estate planning and exit strategy only represent a subset of one of the ten perspectives, Personal Financial Planning. Without looking at your business and succession plan from each of the 10 perspectives, you could be leaving potential land mines uncovered. You also may not be capitalizing on missed-opportunities, therefore you may be putting your business and any established estate or exit planning at jeopardy.
We believe that in addition to the business owner and succession planner, the succession planning team should also consist of the company’s leadership and management team, the owner’s family, and the owner’s advisors (Accountants, Attorneys, Wealth Management and Investment Advisors, etc.)
The Rawls Group works in a team effort with your family, key leadership, accountant, attorney and your current advisors in a 3-phase process: Phase I determines where you stand now in relation to your succession goals; Phase 2 is focused on succession plan development and implementation based upon what was identified in Phase I; and Phase 3 is an ongoing maintenance program to keep your plan updated based on ever-changing life circumstances.
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