Identifying successors in business
The thought of having to relinquish control after having worked hard for a business is pushed to the back of the mind and avoided by many business owners. The existing owner needs to seek professional and legal advice on how to go about the transition process. In any case, a succession plan should be in place.
A first step can be to give a small portion of a power position to someone else. Start small, and the rest will be smoother. Accept that no matter the size of the business, at some point there will be a change in leadership.
Several steps are identified to make succession as easy as possible…
Non-family employees also need assurance that the business will not dissolve and leave them unemployed if something happens to the boss. Clients are also part of the equation and will feel more at ease doing business with a company that has direction, and not a ‘closed shop’ because the owner suddenly dies and there is no-one to take over.
Once the family has clear knowledge on who will take over, it will help reduce sibling conflicts to some extent, especially in case of sudden death and the issue has to be dragged to court.
The apprentice should have vision, creativity, and focus on achieving successful business goals. It may be a setback if the owner wants one of their children to take over and they are not interested in running the affairs of the family business. Pick someone who commands authority and is well respected.
Make sure this individual is capable of making sound decisions, especially financial ones. Ensure that they are able to take initiative and issue directives, and are able to inspire and motivate others.
The more years the successor has served in the company before taking over, the better. Provide opportunities for the successor; delegate some responsibilities in order to enhance their training.
The successor must stipulate with the help of a legal advisor exactly how he/she would like the business to be run and there should be a clear understanding of this by both parties. Emphasize the goal of maximizing profits, how resources should be allocated, and other critical issues that would be of concern.
Command that the same degree of professionalism while the business is under the current owner, be continued with the next boss. Confidence is restored and workers are motivated to stay on with the company.
The owner should now start transferring power, and this can take some time, but eventually power can be handed over. It can be hard, but a strategy will be created. From working five days in a week, this can be reduced slowly to four days, then three, until finally the owner feels it’s time to let go.
A first step can be to give a small portion of a power position to someone else. Start small, and the rest will be smoother. Accept that no matter the size of the business, at some point there will be a change in leadership.
Several steps are identified to make succession as easy as possible…
Communicate
Not communicating the intended succession to family members will likely set the business up for failure. The family needs to know that in the absence of the owner, the business will still run under the leadership of a competent and responsible person.Non-family employees also need assurance that the business will not dissolve and leave them unemployed if something happens to the boss. Clients are also part of the equation and will feel more at ease doing business with a company that has direction, and not a ‘closed shop’ because the owner suddenly dies and there is no-one to take over.
Once the family has clear knowledge on who will take over, it will help reduce sibling conflicts to some extent, especially in case of sudden death and the issue has to be dragged to court.
Identify a successor
Determine whether the successor will be a family member or an employee of the company. Make a business decision that is not based on emotions; find someone with strong leadership skills as this will be a focal point in running the company.The apprentice should have vision, creativity, and focus on achieving successful business goals. It may be a setback if the owner wants one of their children to take over and they are not interested in running the affairs of the family business. Pick someone who commands authority and is well respected.
Provide training
If a successor is not formally trained or requires more formal training, then it is the role of the owner to assist the successor in obtaining this. The successor will also need on-the-job training to have a feel for ‘the hot seat’.Make sure this individual is capable of making sound decisions, especially financial ones. Ensure that they are able to take initiative and issue directives, and are able to inspire and motivate others.
The more years the successor has served in the company before taking over, the better. Provide opportunities for the successor; delegate some responsibilities in order to enhance their training.
Set out a strategic plan for the family business
Setting business goals and values will reduce the chances of complications with what the current owner wants for their company, and what the successor might have in mind.The successor must stipulate with the help of a legal advisor exactly how he/she would like the business to be run and there should be a clear understanding of this by both parties. Emphasize the goal of maximizing profits, how resources should be allocated, and other critical issues that would be of concern.
Keep employees motivated
Maintain and develop strong working relationships among family members and other employees. Discourage family members from bringing private family grudges or jealousy to the workplace.Command that the same degree of professionalism while the business is under the current owner, be continued with the next boss. Confidence is restored and workers are motivated to stay on with the company.
Transition slowly
When all the groundwork has been done in preparing the successor, the current owner should take a background role and monitor the performance of their successor.The owner should now start transferring power, and this can take some time, but eventually power can be handed over. It can be hard, but a strategy will be created. From working five days in a week, this can be reduced slowly to four days, then three, until finally the owner feels it’s time to let go.
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