Integrated Family Business Succession Calls for an Update of Your Organizational Structure
With regards to family business succession planning, probably the most significant component is attitude, especially when thinking about the senior generation’s willingness to modernize the business’s legal structure.
Okay, each of the other keys to family business succession planning are the most critical ones too. That’s mainly because they all depend upon and build upon each other.
Planning for family business succession doesn’t need to be hard if everyone is ready to communicate early and often, and being willing to deal with the possibilities that can be achieved by redesigning the company’s legal structure is among the vital issues for discourse.
If your business is structured (legally as a corporation, partnership, etc.) the way it has been structured for the last few decades it’s more than likely because, operationally at least, there has not been a compelling reason to change.
Now you just may have some reasons why the business needs reorganizing if it’s to become the vehicle for attaining your family’s wishes and aims for the future.
Here are some areas where the organization you are now operating can use an organizational facelift. Your unique circumstances may necessitate other adjustments to be made if you are to achieve success passing down the business to the next generation
Maybe it is time to start thinking about separating the business’s ownership from its management.
Often the actual legal business ownership is the last thing everyone is ready to look at, much less take action on. However that doesn’t mean they must wait to begin moving management related jobs and obligations to the next generation successors.
Doesn’t it seem appropriate to start training your successors right away, permitting them to make the inevitable errors while you’re still around to provide advice?
This is a test of the senior generation’s willingness to face the certainty that someday their son or daughter and their family will undoubtedly be making all the decisions.
Leadership and management are two talents they can only develop on the job. By the time you’re ready to begin transitioning ownership, you’ll feel much more comfortable in their ability to run the place effectively.
A huge stumbling block, the one which frequently ends in the “wait and see” strategy that can be regrettable for everybody is the senior generation’s unwillingness to face the fair vs equal subject.
Possibly if you considered it in another way, putting the efforts and commitments of those who shall be running the place in the next generation in one camp and all those you believe should receive a legacy because they’re family in another.
It isn’t that anyone is loved more than anyone else – it’s that for whatever reason they have chosen not to spend their lives in the family organization.
Those that will own and run the business in the future already have their inheritance – the chance to live the life of their choice and build on what you’ve established.
So why not organize the business to pass the growth on to them and set aside money for the non-business heirs, starting right away.
One thing you could take into account would be to make gifts to your heirs presently while they are building their own families and while you’re here to see how they too are making the most of your legacy to them?
And last in this article but first in everybody’s thoughts are the financial security of the older generation when stacked up against the growth needed to make good on every one of the promises to everybody.
The senior generation people are actually approaching the time when they will want (need) to start receiving income from the company that isn’t associated with their day to day activities. Think of it as retirement for lack of a more exact expression.
The younger generation wants to expand the business simultaneously.
The end result can be extremely irritating for both groups. My advice is solve the senior generation’s fears first.
These people deserve to see where the money is likely to come from, how taking more or less money can effect the organization’s advancement, and what options are available to them.
Address their concerns first and they will put the same amount of conviction into the company’s future as they have throughout their lives.
Succession and planning happen over time and the material above is for the vital family meetings you’ll be having.
Planning for succession often involves mastermind group conversations where you can test assumptions with peers active in the process, and share with them the professional observations of your advisors – men and women involved with your planning for succession process.
I hope you’ll look at a self managed mastermind group when designing the framework of your succession and planning.
Family business succession planning requires that you make the best decisions possible, to insure the most productive outcome. Effective leaders know that their best decisions are those made in collaboration with people whose success they respect and whose opinions they trust. Why not harness the power of your peers, to help you consider possibilities and alternatives about your family business succession strategy? Click here to find out how this is possible!
