In previous posts we touched lightly on the staggering statistics that show nearly 75% of all family businesses will have difficulty with perpetuating business success. Continuing business success into another generation is often dependent upon a variety of key managers, especially if you do not have family in the business or your family is unqualified for ownership. In effect, they become the “Succession Bridge” because a committed group of competent, capable, and committed managers can keep the company moving forward.
During the last political campaign, we heard quite a bit about a “bridge to nowhere.” Unlike that ill-fated Alaskan bridge, the Succession Bridge takes you from one generation to another. It provides a way of getting across two sets of rapids: selling the business and losing a legacy, or turning the business over to unqualified and unprepared successors, crossing your fingers, and hoping for the best.
Business succession planning involves more than family members. To be prepared for the multiple forces that can re-shape your business, you need to have qualified understudies waiting for the opportunity to step into the spotlight. And, just as important, you need to be ready to play a different role yourself: you have to be ready to let go.
The questions then becomes – How do you let go and whom do you prepare to take the reins? It can be a dicey proposition; but if you follow these steps, you can increase the probability of success.
Get outside help to assess your current management team. The assessment should include evaluation of commitment, capability, competence, culture fit, and family fit. A management team that can’t or won’t get along with your family is just another distraction and increases pressures to sell the business.
Create financial structures that provide significant mutual benefit for successful business performance. In the book titled “The Succession Bridge” by Loyd H. Rawls, you will find several lucrative incentive packages that reward management teams for extraordinary results.
Discover and utilize the power of Operating Covenants, Management Covenants, and Organizational Covenants to create team synergy among owners, managers, and employees. These covenants form the basis of the high performance needed to fund the realistic financial and social capital incentives necessary to make effort and reward worthwhile.
Remember that it takes more than a pile of money to make someone think like an owner. It takes achievement, significance, and happiness. If you deny these key motivators to the people building your succession bridge, you might as well have not even started the construction.
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