Family Business - Succession
Thoughts on Succession for Family Owned Business.
Leadership
The leader of a family owned business is a risk taker, or at least needs to be. New ideas may come from anyone inside or outside the organization.
Following through on new ideas can be a huge risk. The leader, recognizes good ideas, tests them out, actively supports and encourages implementation.
Courage, is even more crucial. Having courage means having a tremendous goal. Leaders with courage do extraordinary things and put themselves at risk.
You also have to demonstrate confidence. Confidence comes from looking at all the decisions he made in the past, learning from them and reinforcing factors contributing to success.
Risks can be minimized by having an option, an alternate plan and a reasonable level of consideration, but the decision does need to be made and the leader must show confidence in it to lead others.
Confidence must be shown carefully – not as arrogance.
Delicacy
Succession in business is a delicate process even under the best circumstances, whether the business is sold to a third party or handed off to the next generation. Transition is derailed frequently by any number of variables, from financial realities to emotional perceptions.
Few know how close some small businesses come to closing their doors.
With family members in place, successful businesses have processes and a customer base to generate reliable revenue and profit going forward.
Valuation
When infrastructure, processes and procedures are not invested into employees, most family-owned businesses have little value beyond their hard assets, intellectual property, balance sheet or profit-and-loss statement and cannot be sold as an ongoing operating business.
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