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The
Time For Planning Is Now
Once,
Russ Allred said: Picture in your mind two impassioned octopuses,
their tentacles intertwined, sucking, grabbing and happy.
To the
onlooker, this salacious scene might appear violent, unnatural, or
even nauseating, but to the octopuses it is merely a fact of life.
Many consultants, accountants and the like look at family businesses
in much the same way.
Their
initial reaction and advice is to separate the family and the
business before they get hurt. Despite their good intentions, the
separation normally yields sushi before harmony.
Every
family business owner has heard someone say, "I could never work
with my relatives. I don't know how you do it." The statistics shows
a mixed view. Some do it just fine - other have problems.
Ninety
percent of businesses around the world are family-owned, and
one-third of the largest multinationals are either family-owned or
family-controlled. Standard & Poors reports that family businesses
outperform other stocks across the board. Yet only 30 percent of
family-run companies today succeed into the second generation. An
even smaller 15 percent survive into the third.
So
what is the problem? There are many problems in any business, but
family business problems can be summarized into four: Succession,
Perspective, Function and Equity. Succession is one of the issues.
This arises out of a lack of an orderly succession plan.
It is a daily miracle that there are any owner-managed firms left in
the world with so few making plans for their own continuity. The
toughest thing for the entrepreneur to realize is that time is
constantly running out. Most owners don't plan because they
don't think they are ever going to retire or die.
Owners
should begin planning while they are still healthy and active in
their enterprises. If one waits until the age 65, it would be
even more difficult to do many of the jobs associated with
succession planning, such as teaching, explaining how the business
operates and passing on the spirit and vision with which it was
founded
The
time to plan is between the ages of 55 and 65. And the handing
over of the baton -- the plan itself -- should be a process, rather
than a single event. A three-to-five year plan as a minimum is
recommended while a five to 10 year "reach-out" is more recommended.
The more time allotted for planning, the better the outcome will be.
Adequate planning time enables the owners to test potential
successors in different roles and evaluate their maturity,
commitment, business acumen and leadership abilities. If
you've already anointed your successor, adequate planning time
allows that individual to build up expertise so the passage
transpires so gracefully that no one in the company even feels it
happen.
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