One of the most familiar and common phrases I hear from advisors to Family Businesses is that their clients are simply not ready to talk about succession.
Surely, with dad approaching 65, 70 or even 75, this would have to be one of the most important items on the agenda to ensure that the business will be able to survive?
However, for most business owners, one of the major hurdles is that this task appears to be just too complex. There are a series of financial and legal decisions that need to be made and just thinking about these decisions is stressful. Where do you even start?
Perhaps changing the mindset from seeing imminent succession as an ultimatum to seeing it as an opportunity to create a legacy would help the incumbent generation to more easily start the most important journey their family and business will ever embark on.
Dealing with this important process as an ultimatum means purely reacting to the stressful situations presented by life. By nature, responses to questions asked during stressful times tend to be short-term focused to produce a quick resolution, without considering the long-term consequences.
· Who will run the business and how can they possibly be up for the challenge?
· Who will receive which assets, once I pass away? What is fair?
· How do I protect what I have created so the next generation doesn’t ruin it?
These transactional questions, whilst able to be solved with legal and financial help, can create a ceiling for the next generation, one which they will find hard and painful to push through.
A Legacy approach is one that is built around the needs and emotions of all family members who will be involved in the outcome. It is long-term focused and creates a strong platform for the next generation to build on:
· What are our Family Values and how do we create a vision for the future of our Family and Business?
· How do we support and educate the Next Generation to be the best shareholders, leaders and people they can possibly be?
· What rights and responsibilities come with employment and ownership in our business?
I love guiding Families in Business through these kinds of conversations. All the answers to succession lie within the individuals across the generations that make up each Family.
It is just a matter of having the heart, passion and patience (as well as knowledge) to help guide them through this journey so that the focus is on creating a legacy, rather than dealing with an ultimatum.