Succession planning in family business: If only I’d known then what I know now
Looking back 10 years on one’s life, relationships, career successes and failures, it is interesting to see to what extent the goals and aims you set out to achieve have been realised.
The benefit of planning, anticipating what and when change will occur and thinking of the impact and consequences of various alternative scenarios helps individuals and businesses dynamically position their future.
Such has also been the experience of successful family businesses in Australia. KPMG and Family Business Australia have been surveying the pulse of the small business sector through the bi-annual KPMG & Family Business Australia, Family Business survey.
The findings of these surveys demonstrate a growing awareness amongst family business of the need for strategic planning to encompass not only the business itself but also the ongoing involvement of the family. In short – who will be in charge when the current family members retire?
Ten years ago 72 percent of survey respondents advised they would be looking to transition ownership and/or control in the next 10 years. They were very aware of the need to plan but the development of robust plans to support that process were very nascent.
In 2015, these transitions have begun, but our survey respondents report they are still poorly prepared. Only 27 percent have a documented strategy for the business and only 9 percent have a unified plan for the retirement of the CEO.
Documented plans are the best ways to avoid conflict within the family. They allow conflicting views to be aired and prevent family members derailing the process when it is needed. In family businesses, transition can sometimes be extremely stressful, particularly if a key member becomes ill or dies unexpectedly. Dealing with personal grief as well as keeping a business going can be a very difficult situation.
Awareness of the problem is not enough and planning can never begin too early and a lack of succession planning can be a significant risk to a business.
Garry Beard, Chairman of AH Beard, a fifth generation family company says, “Our success is very much built on our collective vision being shared by everyone in the business from the docks and factories, right through to the front line sales people.” He believes being a family business is their strength and has been part of the success of their entry into China.
Where families take the the time to understand the ramifications of change and commence planning by engaging with both the controllers of the business and the family owners those family businesses thrive and outperform others. A very different result from the businesses where the management of change has been ad hoc and reactionary.
As John Lennon said, “Life is what happens when you are making other plans”. My advice for family businesses is to get on with life, but more importantly to get out and plan. Don’t wait for the right moment because nothing will happen and the right moment may never come.
So go on – start planning, it can be as easy as just starting to talk about it.