All in the Family - Succession Planning for Family by pzp12248

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All in the Family - Succession Planning for Family Businesses


When families debate over Grandpa’s semi-antique rocker, it can be uncomfortable, but that’s nothing
compared to the warfare that can ensue over ownership of a prospering precision valve business where a son,
two nephews and a niece have worked for the past five years A struggle among relatives for possession of a
family business is not uncommon. Whether the transfer of ownership or management is premeditated,
unexpected, or mandatory, the task of passing down tenure is unavoidable. What is avoidable, however, is the
messy state of confusion that an unprepared family business can easily fall into.
The Options
Small business owners have three options for managing the succession of their business. They can leave in
comfort, knowing it will be left in qualified hands. They can work until illness or other circumstances force them
to sell it, often to someone they don’t know and often at a fire sale price. Or, to put it bluntly, they can keep on
working until they die, ignoring the succession problem and leaving chaos behind them.
The first option is obviously the most appealing; but how can business owners achieve it? Succession planning
is the answer. It provides family businesses with a vision and a mission: a vision of what their business,
ownership, and management will look like in the future, and a mission for making that vision become a reality
as smoothly as possible. Creating a plan not only brings some clarity to the business’s future. It also provides
the family with the unity and collaborative experience necessary for making the actual transition successful.
Family Succession Planning: What sets it Apart?
Family businesses face unique challenges that set them apart from the typical business. Foremost among
these is finding a balance between business and family, that is, making decisions that will honor the family’s
values as well as benefit the business. An instance of imbalance would be if a father were to pick his oldest
son to take over his business, simply because he is the first-born, when his youngest son is clearly the more
competent candidate for the job.
The 5 Steps to Successful Succession Planning
  Step 1: The Strategic Plan
  Every succession plan needs a simple layout that’s easy for all employees to understand. The first step to having a
  clear succession plan is having a clear strategic plan. Think about where you and other involved family members want
  see your business in ten years. What are its core capabilities and key markets? What does management look like?
  Who has the ownership?
  Step 2: The Exit Plan
  Under what circumstances will the succession plan take affect? Retirement? Unplanned departure? What financial
  situations will change? These questions help you determine what the succession plan should detail most. You should
  also consider the roles and responsibilities the successor with be expected to take. What control will the successor
  have over executive compensation? Over hiring and firing employees? What rights to the business will the successor
  gain? Can he or she sell the business?
  Step 3: The Attributes of a Leader
  When evaluating candidates for successor is imperative not to slant the requirements toward a particular person
  already under consideration. Make a list of required attributes that can be equally applied to candidates inside and
  outside of the family. Are you looking for someone with previous management experience? How much should they
  know about managing finances? Handling competition? Interacting with employees? Will they value and respect the
  family foundation of your business?




                  This article was provided by allbusiness.com
   

   



  Step 4: Beginning the Search
  Family position is a classic element used to select the candidate for ownership/management of a family business but
  other factors should also be taken into consideration. Placing someone who has the training and skills for the position
  is the central goal. In order to meet this goal you may have to look outside of the family circle. If your successor does
  end up being an outsider, it is likely employees and customers will respect your willingness to make choices that benefit
  the company.

  If family dynamics dictate that a family member must take over the business, start training prospective candidates as
  soon as possible and equip them with the skills they need to become the ideal person for the job. Allow them to train
  with mentors or advisors and encourage them to work outside the family business as managers or on an administrative
  staff. Make it a necessity that they have executive experience.
  Step 5: Expanding Your Resources
  Succession-planning advisors, such as Lise Stewart of Galliard Group, counsel family businesses to form an Advisory
  Board as a permanent resource for the company, with individuals who specialize in specific areas of business
  development. Such a board can provide reputable advice for expanding your business, add value to your business
  should you choose to sell, and compliment your succession plan’s mission for control over your future.
Having a clear vision for your business is what gives it a future. Plan efficiently for that vision and prepare your
businesses for the changes you can control. Successful succession planning gives you the opportunity to set
yourself up for long-term success, so why not take it?




                   This article was provided by allbusiness.com

								
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