It's taken years of planning. You, the business, the family and not to mention the old man, have had to battle with the trauma and the big day has arrived. Congratulations, the baton has finally been transferred to you and now you’re in charge of the family business.
What happens next?
Hopefully the business and the family have undertaken a thorough process and it’s seen as a natural outcome of these deliberations.
Hopefully you have an effective functioning advisory board, or board of directors to support you and perhaps even your parent to act as a mentor. You also have a comprehensive strategic plan in place.
Hopefully your family council, guided by the family charter, has guided the process from the family’s perspective. Other family members are on board and the discussions you've made in the lead up have resulted in agreed positions in relation to not only your role as leader, but how the change impacts on others as well.
Hopefully you have used your time wisely to plan what needs to be done next. At a personal level you have support from your FBA Forum Group or a mentor who has helped you work through the issues and who you can turn to as a sounding board.
Hopefully your predecessor has had the foresight to review their life plan and has a full bucket list, good health and relationships to ensure a purposeful next stage in life.
With all these in place you will still have many challenges to confront, but you’re off to a great start.
What! None of these exist?
Well you've really been thrown into the deep end. Here are some suggestions that might ease the transition from both a business and family perspective.
- Transfer of leadership from a long standing and respected CEO is a major challenge for all stakeholders. It's important to establish effective working relationships with them, though you may even have to make some tough decisions. But it's not about settling old grudges; it's about finding out who can support you in the ongoing growth of your business.
- Family businesses are renowned for having long serving employees, many of whom are regarded as de facto family members. It may be difficult for them to realise that they no longer have a direct line of communication with their old mate, 'the boss' and they may try to bypass you. You'll probably need to have a word with your predecessor to alert him to this and develop a strategy for dealing with it.
- This time of change is ideal for a comprehensive review (or if it doesn't exist, preparation) of your strategic plan. As we know business never stands still. Markets change with incredible speed these days. What opportunities lie out there for your business? What are the risks? How can you revitalise the organisation for the next generation? A sound strategy that targets profitable growth and cash generation is essential.
- Remember you are not alone. If you need support, make use of your advisers, find a mentor, join an FBA Forum Group and if you don't have a board, seriously consider establishing one.
In your pursuit of your business goals, don't ignore the family side of the equation.
- You may be following a strong founder who has the power of (a hopefully benign) dictator. But that style of leadership doesn't work well in a democracy. So you will have to establish a different method for dealing with the family.
- The family council can be your greatest support. It offers a forum where family concerns about the business can be raised and dealt with, away from the business. Information about the business that needs to be relayed to the family, as owners, can also be discussed here. If you don't have a family council, this is an excellent time to set it up.
- It’s also an opportunity to review (or establish) your family charter. Check to ensure that the family is aligned to a common uniting vision based on the family’s values and that it’s still relevant to current circumstances.
- Be sensitive to the place your predecessor finds himself/herself in. They (and don’t forget their spouse) will be in unchartered territory. It's hard to go cold turkey, so give some thought as to how you can respect past achievements and offer a meaningful role to ease separation anxiety.
- If the previous generation still has a financial stake in the business, ongoing communication is critical. The last thing you want is for them to come charging back in as the ‘saviour’ if they sense that the business is in danger.
Most importantly you need to identify your top three issues. What objectives must be achieved in the next 12 months? These are not negotiable! Who can help you accomplish them? How can you ensure you remain on track? Again, this is where a board, supportive chairman, forum group, your advisers or mentor play a critical role.
Business transition is an evolutionary step in the growth of any business. It presents enormous opportunities to revitalise both the enterprise and the people in it and offers you an opportunity to build on the achievements of the previous generation.
Harry Kras is the director of the Family Business Resource Centre.