Four questions to answer that will help your successors succeed
As current family business owners plan their exits from the business, the conversation with the next generation should be intentional, open and start early. Delays can lead to misunderstandings. Parents who are interested in getting the next generation to consider the family’s business should be ready with answers to these questions.
What is your timeline for exiting the business?
Identifying a date for your full retirement drives the planning process and signals to the next generation that you are serious about their success. Leave enough time for organizing your financial affairs and for uninterrupted time to answer your successor’s questions about how you have run the business. Know that economic cycles will impact your timing decision. Indeed businesses are more challenging to run during economic downturns but most business leaders admit they “really learned” how to run their company when they experienced tough economic times.
Do you see me running this business as a partnership with my siblings or cousins?
Given the desire to treat children equally, parents can implicitly pressure successors to share the business with siblings and cousins in their generation. Be honest about this wish with your successor. Not all children have the aptitude to run a business. Sibling dynamics influence business operations. Facilitation may be needed to reduce conflicts and build a high performing team. Children who are not included in the business operations can still serve important roles in honoring the family legacy as the chief family booster or as an educated and engaged owner providing support for the management team.
What would you think if I made some changes to the business?
Entrepreneurial children are a natural product of the entrepreneurial environment they knew growing up. If owners are exiting a mature business then changes will be made to secure new product lines or reach new customers. Bringing the next generation in to the business generally means new investments in technology upgrades.
When can I meet your most trusted advisors?
Future business owners need to know whom their parents count on for advice and counsel on business matters. They need to create professional relationships with these advisors to assist in succession planning and to facilitate any unexpected transition.
These questions are your opportunity to pitch the business as a ready opportunity to grow the family legacy of community and employee commitment. Your answers will guide the timing and structure of the succession planning process and signal to future generations your willingness to prepare an intentional plan to give them the best advantage for success.
Families looking for additional resources on succession planning can learn more at business.oregonstate.edu/familybusinessonline.
Sherri Noxel Ph.D.
Director, Austin Family Business Program
A.E. Coleman Chair in Family Business
L.W. “Bill” Lane Professor in Family Business Management