[et_pb_section fb_built=”1″ _builder_version=”3.22″][et_pb_row _builder_version=”3.25″][et_pb_column type=”4_4″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.5.7″ hover_enabled=”0″]Smart succession planning for a family business is an absolute must for sustaining your company and keeping it prosperous. Very few family business owners, however, are doing a good job preparing to transition their businesses!
Watch our blog this week as Wayne discusses results from an NASBP poll and reveals what constitutes a bullet proof succession plan.
We look forward to hearing your thoughts and comments.
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John says:
A good start to a successful management succession plan is to find a way to involve your key personnel (other than those with an ownership interest) with something like a “Work Completion Agreement.”
These types of agreements help retain key personnel (like Project Managers, Superintendents, etc.), that are integral to the success of the company – the ones that are often overlooked as they are not necessarily involved with the ownership succession.
Keeping these people in place during a “transitional period,” is vital, as their intimate operational knowledge is essential to your company’s survival. You don’t want them to walk away in the middle of an ownership succession because they feel they “still need to feed their families!”
Wayne Rivers says:
This could certainly be a good short term part of a drop dead strategy, John, but it is far from what I address in this blog which is a comprehensive long term strategy that is gradually put into place while all the players are ALIVE. Plan for the possibilities (like death or disability) for sure, but don’t ignore the PROBABILITY that everyone will live and have to carry out a much less black and white succession strategy over time.
Jon Deeny says:
I believe that in some cases, including ours, management and succession plans blur together. What if you are transitioning to a family member? We are a small firm that has a plan for the fourth generation to take over and the other management staff is in place to assist him. I’m not sure what else I would need but I am curious!
Danny Tezak says:
Great insight, Wayne, and you are correct. I believe the percentage of firms with legitimate plans in place is much lower than is being portrayed simply due to the fact that this is one of the most difficult plans to implement. Trying to find the right talent and then molding them into management material takes a tremendous amount of time and effort. Most business owners learned “on the fly” by building their respective businesses and trying to transfer that knowledge and experience to the next generation is difficult, especially when they are not necessarily exposed to the lessons that “hardened” the owners on the ways of the business world. There is no substitute for experience in the trenches and no college education will replicate what it is like being in the “heat of battle” on a difficult project. Management skills are only developed through experience and maturity, so the timeline to create the next line of leaders is pretty lengthy.
There is no doubt though that succession planning needs to be at the forefront of every company to ensure continued success.
Wayne Rivers says:
I agree 100%, Danny. Glad to hear from you, brother!
Joy Kirkpatrick says:
I work with family farms on succession planning and this is something I deal with consistently. Their first questions are what business structure should I have and how can I avoid taxes. The idea of giving up control is difficult for the owner generation to consider. But, as you stated, for so many farmers their farm IS their retirement and also their legacy. If they don’t groom good managers, not only is their retirement just a chunk of land, but they might have to sell it and lose their legacy to fund their retirement.
Wayne Rivers says:
Agree 100%, Joy.
Michael SImms says:
Wayne,
You, again, are spot on! My pet peeve is the confusion between Succession Planning and Exit Planning…. Succession Planning is leadership training that should be established and grown with the life of the business….
Exit Planning is the process, typically in the last 3-7 years of ownership, when you position the business to be sold to whom the owner desires and for what the owner desire. Succession is an on-going leadership process.
Thanks for your insight!
Wayne Rivers says:
Thank you, Michael