How an attitude of ‘she’ll be right, mate’ won’t work for your family business succession
At a recent meeting with some long-standing clients who have built, and continue to operate, a successful family business I asked the parents (who both worked in the business):
- What is your end game?
- Do you want to retire?
- What is the goal for the business?
- What role both in terms of management and ownership, do you envisage for your three children?
I had, of course, asked these questions before without receiving any clear answers. This time, as before, the husband (let’s call him Dennis) gave me his usual answer of “she’ll be right. It’ll work itself out”. At that point, his wife (let’s call her Dianne) dissolved into tears. The outcome of the next few minutes of conversation was that she was worried sick about the future and making sure they treated each of their children fairly.
Was this willful blindness on Dennis’s part?
He had the necessary information from our previous meetings yet continued to refuse to accept it or act on that information. Finally, after Dianne’s comments, the nature and direction of our meeting then took on a different tone and direction.
Was Dennis’s unwillingness to act the result of fear? Was it out of a sense of complacency that somehow it will all work itself out? Was it because at an individual level he didn’t feel that he could solve these issues? Or was it all just too hard? Perhaps its willful blindness?
As business owners why don’t more of us take action in this area? Is it because of pride? Is it because we created and built this business and we’re hanging on because we don’t know what we are going to do next and therefore don’t want to let the business go? Is it because this business is “who I am”, and without it, I feel like I have lost my identity? Or do we just not want to face up to the fact that we are getting older and perhaps our business is not worth quite as much as we would like it to be? Possibly it’s a combination of more than one of these things.
What then, is the solution for family businesses?
Just like giving up smoking or adopting a healthier lifestyle it’s just a matter of not hiding from the issue and taking action. Whether we are teenagers or middle-aged men and women we are all prone to adopting the fallback position of avoidance and procrastination. But unlike teenagers, we as baby boomers, no longer have our parents to prompt us into action.
Some people are already starting to walk away from their businesses because they’re not saleable. Once you get to the point of lacking enthusiasm, energy and commitment for your business it’s possibly too late. It takes some time and energy to prepare a business for a well organised and profitable transition or sale.
The end result for Dennis and Dianne is that they have now taken action. They now have a succession plan in place that involves each of their three children that address both management and ownership transition. They each have different roles and contribute in different areas and levels of expertise. They have now established a board for their business that has functioning systems in place like meeting on a monthly basis with agendas, minutes, action items and a board calendar. They have appointed an independent chairperson so that meetings are run well, issues are dealt with and personal family conflicts are kept to a minimum.
Dennis and Dianne are both still involved and remain on the board.
If the above situation sounds familiar to your own family business, please get in touch to discuss your options with a Succession Plus Accredited Adviser here.