We all know we need succession planning but why do we avoid working on it?
You’re not alone. Nearly 75% of family businesses don’t have a succession plan in place.
Much is written about the succession planning process, but how do you gain motivation and interest with family members to get them to “buy-in” to the process?
One way is to create a sense of urgency.
Our Situation
In our family business, we discussed succession planning a lot, but never formally prepared a plan. There was no sense of urgency, it seemed like an event too far off in the future, and it was just too low a priority compared to running the business.
It took a serious crisis to get us motivated and prepare a succession plan. Our father had a serious, near-fatal, car accident on his drive to work. He survived, but it forced our family to quickly regroup, shift responsibilities, and run the business in his absence while he recovered. There’s nothing like a crisis to create a sense of urgency.
Avoiding the Difficult Issues
There are soft (personal) issues and hard (business) issues that we avoid discussing. We avoid them, because they can become contentious by creating new conflict or escalating existing conflict between family members. At a minimum they can be awkward to discuss, because as a family, we don’t openly discuss our personal feelings well with each other.
What Are the Difficult Issues?
Soft Issues (Personal)
- Retirement and letting go
- Family relationships and conflict
- Giving up control
Hard Issues (Business)
- Strategic planning
- Estate planning
- Choosing leaders
Create a Sense of Urgency:
Prepare a “Flash” Succession Plan
If a business doesn’t have time to prepare a comprehensive plan, another option is to prepare a “lean” succession plan. A shorter process, more like a list of action items in the event of a crisis. Run through the scenario of what would happen if a key family member passed away.
- Helps the family become more aware of succession planning and its importance
- Helps to put in place some basic top-level estate planning initiatives
- Provides an operations action plan if there is a crisis
- The “flash” succession plan deals with the non-sensitive issues only
- Serves as a foundation for a later more comprehensive succession plan
Going through this exercise even if you aren’t experiencing a crisis can help you become better prepared for succession planning and transition to the next generation.
It is a little like insurance, we know we need it, but we find it hard to work on something that we hope will never happen.
One method of motivating family members to discuss these sensitive issues is to create a sense of urgency. Discussing examples or case studies of family businesses that didn’t have a succession plan in place can show family members the consequences and impact on the family and the business.
Some examples:
- Horror Stories-Family businesses that failed without having a succession plan
- Crisis Contingency-What would happen if the founder was suddenly incapacitated?
- Financial Planning-Comparing the differences in family wealth with and without a plan
Complete the discussion by helping family members recognize the comfort and security of having a succession plan in place.
It’s Really About 2 Issues
Two of the most common reasons for not having a plan, include
Discussing the difficult issues
Complexity of the process
