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Family Ties Online: A Road Map to Successful Succession

Post Categories: Expansion, Growth Strategy

Make sure your company successfully handles its most important change.

If you don’t know where you are and you don’t know where you’re going, then any road will get you there, but you won’t know when you have arrived.” ~Anonymous

The use of succession planning to assure the future of a family business is a relatively new concept.  Today, the tools and techniques of succession planning are more often applied to family business as well as to deal with a variety of critical issues that the family has not yet confronted.

Unfortunately, the translation of the succession planning process to the family business universe has seen more than a modest share of frustrations and failures. This may be due in great measure to the refusal of the senior member to deal with the issues.
To really work well, the family business succession planning process needs to begin with the resolution of these issues:

  1. Should the business be perpetuated?
  2. If so, who should be the successor?
  3. When should the succession take place?
  4. How should the successor be prepared?
  5. Are the company’s mission, goals, objectives and strategies appropriate in today’s business environment? If not, what changes should be made? Does the successor agree?
  6. What are the family implications?
  7. What should the timetable look like?

Successfully developing and implementing a succession plan in your family business will allow you to focus on the people issues while your business continues to grow profitably and experiences the leadership transition.

The succession planning process is like taking a trip. It provides an added benefit by putting into sharp focus the following issues:

  1. Where are you now? Where do you want to go?
  2. What are the obstacles to overcome?
  3. Is there a successor interested and capable to step up?
  4. How do you know when it is time to effect the transfer of responsibility? Of ownership?


The succession planning process involves a number of sequential activities, each of which builds on information and direction generated from the previous activities. Family businesses can use the following planning components:

1. The Succession Issues

Before embarking on the road to the development of your succession plan the succession issues described above should be faced. Is there a family member who is capable and interested in being the successor? If not, the business will have to be sold either to the employees or an outsider.

2. Develop a Plan to Plan

In this step, an orientation to the planning process should be conducted. Family businesses may wish to use the services of a consultant to assist in accomplishing the first step.

3. Small Group Meetings

Small Group Meetings with customers, employees and suppliers including bankers and other professionals serving the business can be used to identify the critical succession issues facing your family business and to provide input to assist.

4. Succession Business Planning

Planning sessions should be conducted for your key family members and nonfamily managers and executives. These sessions should be conducted away from the business. You should schedule at least one full day, and no current issues should be dealt with.

  • You want to discuss what you do well and what should be improved.
  • You want to review your mission, goals, objectives and strategies.
  • You want to review your products and services. Are they appropriate for the current and future marketplace?
  • You should take a hard look at the changes that will have to be made to remain competitive and grow the business.
  • What will the changes cost and where will the dollars come from to underwrite the cost of the changes?

5. Customer Audit

We are beginning to see customers being brought into the process through surveys. The survey is designed with the input gained at the Planning Session. The purpose of the survey is to evaluate current conditions, to determine which conditions are in need of change, as well as to assess the mood of the customer base and determine what they would like to have available in the future.

You are able to ascertain whether your views are in tune with your customers. An important element is a survey follow-up to sample the nonresponders.

Sometimes it is beneficial to visit the top 10 customers and the bottom 10 customers along with the successor. It is a good way to learn firsthand why you are important to the top 10 and why you are not important to the bottom 10.

6. Succession Plan Development

The next step is the development of the succession plan. Using an agreed-upon planning horizon (usually three to five years) and bringing together all of the data gathered in the earlier steps, you can develop a succession plan for your family business.  It should be written and then reviewed by the key family members, subscribed to by the successor and key executives and perhaps your banker where credit lines are significant to the continued success of the business. And, of course, you want to learn from your accountants and attorneys what matters will have to be resolved.

Using the successor to play a role in the plan development process is an excellent way to involve the successor and give the successor credibility in your company with the key executives, professionals including your banker. This will make an important contribution to a successful transition process.

Make sure that the plan describes the authority, responsibility and transition process for the family successor. A technique sometimes used is to designate a nonfamily mentor to work with the successor in the development and implementation of the plan.

7. And for the Senior Family Member

While the process is moving forward, the senior family member may feel the business is passing him or her by. This can create problems as the family, and key executives are inclined to take sides. A better approach is to introduce the plan in a fashion that will allow the senior member to recognize that their participation is vital to the process and needs to reflect the years of experience and contributions to the success of the business made by the senior family member. Make a significant effort to recognize the special needs and contribution of the senior family member. Help them remain as involved as possible perhaps through industry or professional association involvement.


A family business that commits itself to learn and use the succession planning process invariably generates new and positive enthusiasm, in addition to benefiting from the structural, programmatic and procedural steps of the process. This enthusiasm often enhances the commitment of the successor to the future success of the business.