In working with family businesses and their succession planning over the years, I have certainly seen an array of challenges and successes. Some of the most common barriers that can potentially derail a succession plan have nothing to do with structure. In fact, they almost exclusively have to do with intentionality and communication.
Below are three common barriers I have seen when working through a family succession plan.
1. Lack of goal congruency
Lack of congruency occurs when all parties are not on the same page regarding their expected outcomes. For instance, the senior generation may not be quite ready to step fully away and the next generation may be pushing to get them out.
The situation can be exacerbated by an inability to fully understand or acknowledge the other party’s perspective. Does the next generation know how difficult it is for the senior generation to walk away and how important it is for the senior generation to continue to have some involvement? Does the senior generation know the concerns that the next generation has with them sticking around for too long? Have they even talked about it?
We have seen this happen many times, and as a result, the process can have trouble getting started or can just get stuck. So, one of the first steps in our family transition process is to create a roadmap for everyone in the family to get on the same page.
2. Lack of inclusion
The lack of inclusion is intertwined with the lack of goal congruency. This situation happens when the senior generation develops a plan without involving the next generation or when the next generation moves ahead with developing a plan without including the senior generation. Both circumstances lead to frustration and quite often get to a point where both parties throw their hands up in the air and stop the entire process.
A great amount of effort and focus goes into developing a succession plan and it is difficult for each party to understand why the others do not see their point of view. This is why spending sufficient time up front and including all parties during the planning process is so valuable.
3. Not having built a business for long-term success
Too many family business owners focus too heavily on day-to-day execution at the expense of building a long-term strategy. Then, when it becomes time to talk strategy, it becomes a reactionary event instead of a planned one. As a result, succession and transition options become much more limited and outcomes become less desirable, leading to dissatisfaction and regret.
Every family business should be working on at least one long-term strategy item each year. The positive incremental changes to the business by making this a regular process will not only make the company stronger but will also make it more viable and create more options when the time comes to transition to the next generation.
Regardless of what stage your family business is in, it is a good practice to begin having these succession planning conversations and to continue them regularly. Doing so will help ensure these common barriers don’t stand in your way of continuing to build a strong business that is built to last for generations to come.
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