Apr 02, 2007
by LOWELL H. LAMBERTON Central Oregon Community College
Is yours a family business? According to federal government figures, around 92 percent of all businesses in America are family-owned and controlled. Fam-ily-owned businesses provide jobs for roughly 58 percent of the workforce and accounted for more than 75 percent of all new jobs in 2003. If you are part of such a business, your importance to the nation’s’ economy is staggering.
Many family businesses, however, operate as though there were no tomorrow. Owners often think of the family—and perhaps of themselves—as virtually immortal. Why plan for future ownership, when it’s all in the family anyway? Perhaps even more than other companies, family-owned businesses need succession plans. Family members must jointly develop a succession strategy. Failure to do so can result in the loss of everything the company is about.
Your succession strategy should contain the following considerations:
Shared vision. First, your chosen successor should thoroughly understand the vision of the enterprise. That includes a knowledge of the firm’s history and initial purpose. If that purpose has changed over the years, anyone who will take it over must understand such changes and the ways they happened. Most of all, the successor must have some genuine buy-in as to what the business is all about.
Personal qualities. Often, the family founder has succeeded because of personal qualities or talents that are unique to him or her. Whether that is the case or not, some inventory must be taken of the personal qualities of whoever is the successor—family member or not. Some qualities are mandatory regardless of the nature of the firm. These would include basic honesty, stability and maturity, enthusiasm, loyalty and organizational abilities.
Your basic steps in succession planning are:
Family-owned businesses vary as much as families themselves. All have unique issues that must be dealt with if the company is to continue through the decades. These tips, though, should help you to ask some of the right questions. Most importantly—don’t procrastinate on this important issue.