Family Business – Or Not?
According to some recent research by AXA and Monash University, family business and succession are not always a healthy mix – in Victoria alone of third or forth generation family businesses:
- 33.7% Have a succession plan for the future ownership of the business
- 15.6% Have an ownership succession plan in writing
- 9.4% Have an ownership succession plan implemented
- 18.1% Have a succession plan for the future management of the business
- 14.2% Have a management succession plan in writing
- 12.1% Have a management succession plan implemented
- 91.3% Do NOT have a documented family constitution
- 26.2% Do NOT have a management structure in writing
- 31.3% Have a performance appraisal system for family member.
Some amazing numbers when you look at them carefully – but why?
One of the least examined issues around succession planning is the interpersonal and emotional upheaval that can result. For many business owners this is a much bigger decision that moving house or deciding which school to send a child to. Business owners typically spend years of blood sweat and tears at great sacrifice to build up a business – for many their largest asset. The decision of how to best realise that value can be heart wrenching.
Once we understand this is a big aspect of dealing with succession in any business and a great reason for the plan to be implemented early in the business life cycle, we can map out time and resources during the succession process ( over several years ideally ) to provide support to the busienss owner in dealing with the emotional factors. I have seen several technically brilliant succession plans fall apart because this issue has never been properly addressed.