Take it from us, succession planning for a family-run business can be one of the most difficult things you can ever do as an incumbent CEO. They’re emotional, often complex, and messy. That’s because each family business is unique, and the directors and stakeholders are not just wearing a hat or playing a role. They’re also a dad, an uncle, an aunt, or a brother as well.
Therefore, sometimes running the business operation depends on mutual understanding, family dynamics, and trust. But even then, family ties and business may suffer during succession planning and the transition process. So, if you’re the head of the family and the family business, it’s important that you have a succession plan in place.
And even if you aren’t retiring any time soon, you can always begin family business succession planning early. This way, it’ll be easier for you to map out responsibilities, internal relationships, vendors, and customer relationships as well and allow you to find the best candidate for your position.
Here are some tried and tested tips from our family business succession planning experts at Cochran, Cochran & Yale that can help streamline your process:
You Need To Consider Your Goals And Expectations
As the head of the family and the business, you may have poured your blood and sweat into the family business. You must have spent countless nights pouring over contracts, worried about meetings, discussing legal structures, and so on. However, at some point, you may feel like stepping back and letting your business move on without you at the helm. So, you’ll need to ask yourself some questions like:
- What will happen to the business in your total absence a day from now?
- How much longer do you want to run the family business?
- Who is the best person to replace you when you cannot run the business by yourself?
Once you’ve figured out the answers to these questions, you can begin your family business succession planning. If you have family members who can be successors or any competent leader in your office, you can call your attorney to draft a buy-sell agreement to transfer control and ownership of the business.
Talk Honestly To People Who You Think Would Be Best For The Role
Succession planning for a family business is not only done based on seniority. It’s based on capability, skills, and, most of all, interest. So, if you have family members who would not be or would be good for the leadership position, it doesn’t automatically make them a part of your succession plan. You also need to look for candidates who show interest, and this can be someone who hasn’t been in the limelight but ensures that everything runs smoothly in the background.
So, once you’ve analyzed their skill set, you can speak to that family member and ask about their vision and goals for the business. However, don’t be alarmed if their vision doesn’t match your own. Also, remember to reiterate and prepare them for the commitment required on their end and explain the journey ahead of them. And ask about the long-term goals for the business and gauge if they’ll have the support of fellow family members and employees to accomplish those goals.
If you’re worried about family members colluding with one another to force your hand, you can always draft an NDA to protect these conversations, trade secrets, and family members.
Shortlist Your Candidates And Think Critically About Their Vision For The Business
We understand that you want to leave your business in good hands. So, ensure that you think critically and realistically about your choice. And communicate to the person what it takes to run a business. So, before you hand over the reins, check if they:
- Are comfortable managing customer and vendor relationships, professional relationships with employees and family members, and navigating the politics of family members in the workplace.
- Understand that they may need to work long hours and sacrifice personal time.
- Can be the “boss”
- Love the business itself
… and any other questions you think are important to you.
You can also draft up an agreement if you think your choice may be met with some resistance from the other family members. It can define the process of transition. It will include who will run the business as the future CEO, how and when the responsibilities will shift, etc.
Become A Mentor
Once you’re happy with your choice, you need to become a mentor to your successor. That individual will know the nuts and bolts of the business eventually. However, it’s best that you teach them yourself rather than watching them struggle to figure it out later.
You can start by introducing your successor to your vendors, customers, and employees so that everyone involved in and with your business can become familiar with your successor before the transition occurs. This will help them gently take over the role without making huge waves.
Gradually, Let Go Of The Reins
After you’ve spent considerable time training your successors, take some time off your business responsibilities to pursue a hobby, go on a vacation, and spend some time with your wife and kids.
And before you know it, your successors will have taken over the delegated responsibilities and duties and implemented your teachings as their own. You’ll need to avoid checking on your successor when you’re not in the office. This will also give you a chance to evaluate if your chosen one can get the job done without you around.
However, make yourself available if they need your advice or wish for you to handle a situation where you’ll have a better chance of success than them. You don’t want your successor to feel that you’ve left them in the dark, on their own.
Reach Out To One Of The Best Executive Recruiters In New York
If you’re ready to choose a successor for your family-run business, you can reach out to Cochran, Cochran & Yale. We’re New York Executive Headhunters NY and succession planning experts in NY.
Get in touch with us today to learn more about CEO and VP Finance recruiters NY.