Succession planning is among the biggest worries for owners of family businesses. George Square Financial Management explains how taking advice early on can ease the stress and help family businesses to meet their current and long-term goals.
Succession planning may be one of the most challenging experiences facing any business leader, especially an entrepreneurial business person who has built a family business from scratch, so it is crucial to get it right. For a family business, transition is a once in a lifetime decision.
The first step in maintaining the strength of an enterprise and the family’s prosperity is a good succession plan. Discussing how a family business should continue beyond the career, or even the life, of the founder can be difficult, as it often crosses business and personal spheres. According to research, issues around succession planning make up four of the top ten worries keeping family business owners awake at night.
Top 10 family business worries
- Continuing to develop and remain a profitable business
- Management succession planning
- Red tape, regulations and legislation
- Planning for later life
- Engaging and developing the next generation
- Ownership succession and developing responsible future owners
- Identifying and maintaining family values
- Extracting value from the business
- Developing effective marketing, social media and PR strategies
(Source: Close Brothers Asset Management)
It is not uncommon for the entrepreneurial first generation of family businesses to overlook succession planning or leave it until the last minute, but this can make the process even harder.
Maintaining family values
The research into family businesses found that management and ownership succession planning were a worry to business owners; engaging and developing the next generation to remain a profitable business, whilst at the same time maintaining family values.
Personal finances also stood out, with worries about planning for later life.
Challenges for family-owned SMEs
Small, UK family businesses have an especially hard time navigating regulation and legislation, all of which are outside their immediate control. Adapting to changing policy whilst remaining loyal to their set of unique family values and running a profitable business were also found to be challenges and could impact upon succession plans.
Looking to develop a sustainable organisation for years to come?
Handing a family business to the next generation is a major process and requires careful consideration. Not only must owners select and develop the successors, protect brand reputation and retain knowledge, and ensure family values are adhered to, they must also plan for their own retirement. The effort, however, is crucial to developing a sustainable organisation for years to come.