The time has come, and you are ready to retire. Or perhaps, you are starting to plan for the day you retire and move on to other passions. In either case, is your family business prepared for your retirement?
Succession is a significant event in a multi-generational family business. What may have seemed like the logical plan years ago, may no longer be a viable option. Children grow up and may pursue different paths. Other family members who may have once been in a position to assume control may not be able to take on that role. Life is dynamic and constantly changing; however, that doesn’t mean you can’t retire with confidence in the succession of your business. Consider the following when preparing for the succession of your family business:
Actively Prepare Family Members The transition of leadership in any company is a significant milestone, especially in a family business. If you’re hoping to keep the business in the family, then the next generation will need to show a keen and heartfelt desire to take on that role…and that desire is not something you can force. It must be decided upon and embraced independently. To help facilitate this natural desire, there must be a positive family climate of open communication, focus on values, and a clear picture of the vision for the company. Provide opportunities for involvement and leadership early on to allow individuals the chance to see what being a part of the family business requires.
Invest in Your Family’s Future Investing in those things in life that you want to encourage incoming generations is invaluable. Funds are a means to do just this. It is a blessing to have the ability to say, “I’m going to get my education and cover my health insurance,” and to know you will have the money to do those things because you or your family business has established funds for just those purposes. Helping family members access education, health care, investment opportunities, etc. allows them to pursue personal interests and motivates them to hopefully contribute to the family business in some way as a result.
Understand the Needs of the Next Generation and Respect Them Not everyone in the family may be the best fit for the company, and even obvious successors of the next generation may not be ready or right for the job. When owners can accept that the next generation must make their own decisions, there will be more respect, love, and willingness for those family members to still be a part of the business in one way or another. Forcing succession on the next generation will only lead to disastrous results both for the company and your familial relationships.
Be Open to the Possibility of Outside Leadership Part of preparing for a successful succession is to entertain all possibilities and options. In some cases, the transition of the family business from one generation to another is unsuccessful. With the help of family members, you can determine non-family managers who could be good choices in carrying on the business.
Your passion and life as the owner of your family business will someday come to an end; ensure that the generations to follow are prepared, invested and committed to caring on what you and others before you have built.