Is Now the Time to Make a Family Succession Plan?
My wife and I have been running back and forth to the Florida Keys in the winters, and my adult children are basically running our business half the year. The kids are comfortable making key decisions without me, but I do like having a place to come back to in the summer, seeing familiar faces, and getting back into the routine. How do I know when it’s the right time to get a succession plan in place?
It’s time.
A succession plan is just that – a plan. It doesn’t mean you have to walk away for good. It doesn’t mean everything is written in stone. You do need to start to lay things out, though – and the sooner, the better.
First of all, your family needs to understand what you’re thinking. You need honest feedback from your family members on whether they want to make a long-term commitment to the business and what their roles will be.
Second, the experts in your world need a chance to review and give you feedback on the legal and financial ramifications of what you are considering.
Third, running without a plan is risky and leaves you vulnerable should something happen to you.
Fourth, you need to start preparing for being apart from your business. You and your wife are probably very wrapped up in the business socially, financially, in your habits, and in your feelings of self-worth and purpose.
The time to start working through all the succession planning steps should begin well before you transition the business.
Let’s talk about having honest discussions with the family. The goal is to get at the truth. Today’s truth.
When I say today’s truth, this is something I see in family businesses quite often. The parents base their assumptions on something the kids said 10 years ago. Perhaps there are new spouses and grandchildren to consider. Maybe there are family members who live far away or are not so involved in the business but still expect a fair piece of the pie when the business changes hands. All of this must be spelled out in the succession plan.
As you have these discussions to get at the truth, you will discover that the timeline discussions will start to happen organically. You won’t need to “decide when” because various factors will begin to influence that timeline. If your children are going to buy you out, that doesn’t happen overnight. If you are going to move permanently to Florida, there will be timelines associated with that process. This is how the puzzle pieces start to fit together, and how you get a glimpse of what the future might look like.
In addition, you will also be able to discard ideas that have held you back. This is the importance of being proactive.
At LaManna Consulting Group, we can help with many aspects of your succession plan. We can give you an idea of what your business could sell for. We can provide a family business expert who can help you conduct the discussions productively. We can coach your family on leadership and what it takes to steer a ship with so many family members on board.
Furthermore, we always recommend in these situations that you strengthen the business from the inside, so that when the kids take over, the new entity has the momentum and power to succeed.
So the answer to your question is “now.” This is the time to get started with family business succession planning. Download our free guide, Succession Planning Simplified to help you get started, then let me know how it goes and if we can help.