Who will take over when the family member managing your family business dies or retires?
The importance of preparing for family business succession before a new leader must take over cannot be emphasized too strongly.
Unfortunately, there is no guarantee that the current family leader will be able to continue to lead the company in the future...a plane crash, a heart attack, or any other sudden tragic event could come as a huge surprise to both the family and the family-owned business.
Planning is especially critical when the top family member approaches retirement age or is in poor health, but the best time to prepare for orderly succession and generational transition is years before transition looms.
A family meeting dedicated to family business succession planning should be held in a neutral setting, away from interruptions. This exercise can help focus discussion, particularly if the meeting involves the assistance of a professional consultant to guide the agenda.
Topics to be covered in a family business succession planning meeting include:
- What are the family goals for the future?
- What are the plans and desires of next-generation family members?
- Who is interested in staying with the business?
- Who has the most aptitude for leadership?
- What if several able younger family members aspire to lead the business?
- What role will other younger members play?
- What if next-generation family members are not interested in the business?
- How should the company go about grooming its future leaders?
- How will the present leaders prepare for stepping down?
- What are the financial aspects of the company's leadership transition?
Again, don't be shy to bring in a business transition consultant. A good exit planning consultant can lead the discussion in a healthy way that creates an actionable plan. Without that, the meeting may raise more questions than answers.