“Everybody wants to go to heaven, but nobody wants to die” is the title of a book authored by Crowder and Hogan that fittingly describes the ambivalent nature of founders and business owners in letting go of their businesses in favor of the next generation.
The back cover of the book also has an apt description, “None of us are getting out of here alive, but we conclude that death is not the ultimate calamity.” Though the book has a different context, the message is clear: the ultimate calamity is the demise of the business should the founder refuse to embrace change and succession.
Every founder aspires to perpetuate his legacy, but because of fear and ambivalence, that desire is overshadowed by his reluctance to hand over power and control. Indeed, we all desire to live for as long as it takes and it is for that reason that nobody really prepares for one’s death. According to psychologist and author Kathy Marshack, “Founders are notoriously poor at planning for the future of their businesses. As a result, most family businesses don’t live beyond the first generation. And death is not an easy subject to talk about, nor is retirement. But it is a subject that needs to be addressed by the family. By its very nature, the death of a leader can shake the very foundations of the business and the institutions whose lives depended on it.”
“Is the business merely a reflection of the leader? What part do other family members play? Who will run the business after the founder steps down? When will the founder step down?” These questions reflect what we envision the founder must do before death comes knocking—a succession plan. It is not an event but rather a long, arduous journey that requires early preparation and the full participation of the business owner, his family, and the family business advisor. While founders are often aware of the importance of crafting a succession plan, they also experience psychological resistance to prepare and manage their eventual exits. Admittedly, it is tough to plan ahead. However, it can be exciting and rewarding to know that their vision and legacy will live on and prosper under the guidance of trusted and qualified family members.
The Clock Is Ticking
The leader must prepare the transition plan and act now. He must anticipate the future needs of the business as his skills sets and leadership styles that were successful in the past may prove to be outdated. As one next-generation offspring put it, alluding to his father’s style of leadership, “Papa’s decision is so Neolithic, and at 40, I am beginning to lose hope that he will ever give up control.” In starting the succession planning process, business owners should consider the following:
- What are your goals as a business owner?
- What is your assessment of the next generation’s ability to take the business forward?
- Are your children united as siblings, or are they merely pretending to be close because they have a common economic interest as future owners?
- How are the in-laws? Are they showing signs of overly controlling your children?
- Are the functional skills of the next generation sufficient? Where are they weak at? If there are gaps, what intervention would you want done to fill up those gaps?
- Were your aspirations and goals articulated to your children? As a founder, you need to reflect if your children share the same values as yours.
- It is also vital to ascertain what kind of current and future governance intervention is needed to provide clarity for family members and help minimize conflict in dealing with all aspects of the business.
- As a business leader, are you unequivocally clear with your planned retirement, or do you keep complaining about how tired and exhausted you are, constantly mulling the thought of stepping down?/WDJ