Don’t Let the Failure to Communicate be Your Business Succession Plan’s Downfall
Part 8 of the "Process-Oriented Approach to Family Business Succession Planning" Blog Series
I recently met with a new client and was delighted to find that he had a succession plan in place for his thriving and profitable service business. Unfortunately, my delight quickly turned to dismay as I probed with some follow-up questions. When I asked if I could see the plan, he pulled a single page from a file in his desk drawer. The plan of which he was so proud only moments before consisted of nothing more than a handful of cryptic bullet points. I posited that something, though light on details, was surely better than nothing.
I then asked what the family members and key employees who were critical to the success of the plan thought of it. He looked at me with disbelief and responded that he had no reason to share his thoughts since he was still firmly in control and intended to remain there for at least the next several years. As we began to engage the key stakeholders in discussions about business transition, we quickly found that none of the individuals he had identified as potential successors were interested in leading the company into the future.
The Importance of a Process-Oriented Approach to Business Succession Planning
This was not the first time, and I would venture to say it will not be the last time, that I encounterd a scenario such as the one outlined above. In an earlier post, I shared the dire statistics related to the probability of achieving transition goals among succeeding generations of family members and other stakeholders. In my experience, the inability of the senior generation business owner to communicate his goals and objectives for the family and the business presents one of the greatest obstacles to the transition planning process and certainly plays a role in the failure to achieve the desired result.
Once again, here is where a process-oriented approach can save the day. I am a firm advocate that a successful business transition should include a comprehensive written plan for both the business and the family (see graphic above). The written business succession plan will address ownership and management succession, and may exist alongside a written business mission statement (a short statement that defines the essence of the business) and a written strategic plan (a more thorough statement of purpose and philosophy highlighting both short-term and long-term goals and the plans to meet those goals). The family mission statement will clarify the family’s goals, values, and philosophies as they relate to the individuals, the business, and the community.
How to Write a Family Mission Statement
In order to achieve an appropriate level of buy-in, the process of establishing the family mission and the succession plan should be collaborative. By necessity, the process will require a high level of open, honest and transparent communication. The process may involve one-on-one dialogues between the senior generation owner and family members and other stakeholders, and will likely involve a series of family or group meetings.
For some individuals, this may be difficult. In many instances, the parties to the discussion are faced with the challenge of separating their role in the family from their role in the business in a manner that results in healthy dialogue. In situations where such communication does not come naturally, the services of a communication coach or other facilitator will be well worth the investment. A trained professional will assist the participants in setting emotion aside, allowing everyone to address the hot button issues head-on in an effort to reach appropriate conclusions while respecting the disparate opinions that may have been brought to the table. Additionally, open communication should also reduce the confusion that stems for reliance on assumptions that may or may not be valid under the circumstances. Again, the more serious effort committed to the process, the greater likelihood of success.
In the end, collaboration and communication will empower the senior generation owners and the future owners and leaders to develop an attainable plan, increasing the probability of a successful transition, and avoiding a result where the business into which you have invested so much becomes but an unfortunate statistic.
Read other posts in our "Process-Oriented Approach to Family Business Succession Planning" Blog Series:
Part 1: Effective Business Succession Planning: A Call to Action
Part 2: 18 Must Answer Questions for Family Owned Business
Part 3: Balancing Family Relations with Family Business
Part 4: Identifying the Business Owner's Goals - Cash Flow and Financial Planning
Part 5: Identifying the Business Owner's Goals - Taxes
Part 6: Business Succession Planning: Keeping Your Buy-Sell Agreement Relevant
Part 7: Business Succession: Who Are the Stakeholders and How Can You Satisfy Them?