When a family business assumes that the next generation can simply take over where mom or dad left off without pausing to consider the CEO job description, governance, or the evolving business context, they may be setting themselves up to fail. Families have broken up, reputations have been lost, and businesses have collapsed because the generation in control did not consider how to set the next generation up for success. Just as a business must reinvent itself as markets shift, so must a business family reinvent or at least thoughtfully revisit and refresh its ownership and leadership model. Seek to understand the changing players and dynamics so that you have better context for what your business, family, and owners need in the future.
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You may dream about your children leading your company one day. But have you discussed a succession plan to make that happen? A lack of communication could prevent that dream from coming true — especially if your children have other plans, says Greg Miller, planning and life events specialist with Wells Fargo Advisors. Here, Miller shares the important topics to consider when discussing the family business — and your succession plan — with your adult children. Many parents are surprised by how little their adult children know about the business they run, about its history and role in the community, Miller says. Miller suggests talking to your children about why you or another family member founded the company, and the hard work and ups and downs of the early years. Those stories could help the business mean more to your children or grandchildren, as you connect it to their family history.
Do you think succession planning is just for family businesses or for business owners who are close to retirement? Think again. Life happens—and unless you have a plan to deal with the unexpected, the business you worked so hard to build could crumble if you become disabled, die, get divorced or decide to split with your business partner. It can even make it easier for your business or potential buyers to get loans or attract investors.
Succession planning is the process whereby an organization ensures that employees are recruited and developed to fill each key role within the company. In this process, you ensure that you will never have a key role open for which another employee is not prepared. This is also significant as you develop your talent bench strength within your organization. Sure, you will have an occasional situation arise for which you are unprepared, but for the vast majority of employee movement, your succession plan is in place. You will have had a systematic process for preparing employees to fill key roles as they become vacant.