As a business owner, you’re most likely consumed with the day-to-day running of your business and driving growth. It’s your baby and the last thing you want to do is sit down and make a plan for turning it over to someone else. As a TAB advisor, I have met owners who think they’re too young or believe that they’ll run the business for the rest of their lives, so why bother with succession planning? A 2014 PwC survey found that by 2019, more than half of Canadian family businesses are expected to change owners, but that only 20% of those businesses have a clearly documented succession plan in place for when the time comes.
Why does every business owner need a succession plan? We don’t have a window into the future and have no idea if or when events may arise that force succession – premature death, disability, personal or financial reasons or retirement. Without a succession plan, your business’s fate is uncertain and could be left in the hands of the court. It may also cause disputes among family members as to who should take over. The only way to control your company’s future and to protect yourself, your family and your employees is with a succession plan. I’ve outlined below what I feel are the three top options for succession.
- Transition the business within the family: If you choose to transition the business within the family, you’ll have to choose a successor. This may not be an easy (or popular decision) if multiple family members work in the business and all want the position at the helm. There may also not be a qualified successor among the family members, which brings with it a unique set of problems.
- Sell the business to a partner or employee(s): You’ll have to determine the value of the business. There are many factors that affect the value of your business, so it’s important to seek assistance in helping you calculate an accurate value. And the value of your business will continue to change so it will have to be re-evaluated on an ongoing basis.
- Sell the business to an outside buyer: Same as above.
It’s never too early to create a succession plan. It should be done by experts as it involves several disciplines including accounting, financial services, and law. There isn’t a one-size-fits-all succession plan template that you can download and plug information into. Each business owner will have different ideas about what their business succession should look like and the experts can ensure that your wishes are carried out.
I would be remiss if I also didn’t mention that in order for any succession plan to really succeed, you’ll need to have the right people and processes in place that allow for the day-to-day operations of the business to function without you.
No matter how good your succession plan is, it can’t anticipate changes that may affect your business in the future, which is why it will constantly have to evolve and change. I believe in starting early, setting expectations, and making the decisions that are right for you and your business. Succession planning is the only way to control the fate of your business.
Have you started working on your succession plan? Want more advice on succession planning, or general advice from a seasoned business advisor? Find out if a TAB Board is right for you!
Effective communication skills are the foundation of success not only socially and personally, but in business as well. Communication is essential to the success of any business, but it is often overlooked. In my many years dealing with business owners, I have seen time and time again the effects poor communication between team members can have on a business.
As a business owner, it is important to understand that communication can only be successful if the recipient of the message comprehends what they are being told. The communication process is a two-way street – how the message is delivered is just as imperative as how we listen.
You cannot expect your team to take anything away from your meetings, briefs, or presentations if you do not engage them and take the time to craft your message to help them understand it. Your expectations and desired outcomes must be made clear in order for your team to deliver.
Follow the three easy steps below to improve the communication in your business:
- Learn to listen to your team, both verbally and non-verbally. Observing how something is said can be just as valuable as listening to what exactly is said.
- Be supportive of your team and encourage others to be involved in discussions and meetings. Open and honest dialogue will provide you with great insight into your business.
3. Be Consistent
- Deliver your message consistently each time, using precise and exact language, clear ideas, and an assertive manner. Regardless of whether the message is positive or negative, your language and manner should not change.
Your team, and business will benefit exponentially from improved communication in the workplace. How do you effectively communicate with your team? I would love to hear your feedback in the comments below!
Whether you have parents with a business, or know of family businesses, you may read the title of this blog and instinctively answer, “yes” in your head. Working alongside your father or mother sounds great! Employment at your fingertips, stability, and less pressure sounds ideal, but is it?
My experience with a number of family businesses has lead me to believe that it takes a very special parent-child relationship to achieve success. If you’re thinking of joining your parent’s business, there are some important questions to ask yourself before making a decision.
1. Do you have the right skill-set/education?
It is important to add value to the business, not just for obvious reasons, but also to feel like you truly have earned and deserve your spot. If your skill-set does not align with the business, the experience may be challenging – either because you’re not engaged (due to a lack of interest) or because you can’t grasp the work.
2. What relationship do you have with your parents?
Critically analyze the relationship you have with your parents. Will the level of respect that is necessary in a professional setting be met? If your relationship is tumultuous outside of work, chances are that will translate into the workplace.
3. What type of work environment are you looking for?
If you’re looking for camaraderie amongst coworkers and equal treatment, working in the family business may not be for you. As the child of the owner, the company employees automatically see you differently, and work can even become a lonely place.
4. What are your long-term goals?
Do you plan on staying with your family business forever? If so, do your parents plan on having you there forever? Your goals must be aligned with those of your family. If you plan on taking over the business, how long are you willing to wait? Your parent may not be ready to relinquish the business to you as soon as you think.
5. Will you have the autonomy you want?
Are you trusted enough to make decisions and have your voice heard in a family business? It is often easier for parents to undermine the opinions and ideas of a child rather than someone they have a professional relationship with. If you’re looking to have creative ownership and freedom, you must decide whether it exists for you in your family business.
Ultimately, it can be difficult to successfully integrate yourself into the family business. Whether you’re starting from the bottom and working your way up through the organization, or moving right into the corner office, you must understand the risks that come with mixing your professional and family lives.
Have you ever worked for a parent, or experienced second-hand a parent-child relationship in a business? Please share with me any experiences or input you have on this topic in the comments below.