Often there is confusion about what family business succession is really all about, but honestly, there is only one answer.
You may think, for example, ‘I haven’t really decided yet what to do with the business. I don’t think the children are interested even though I haven’t actually spoken to them yet. I think I will eventually sell it but before then there is some work to be done. I need to close down that inefficient factory, I’m thinking of buying John’s business, which when merged will lift my profit and value, and I need to get my management team working well.’ Succession discussions often focus on what to do with the business, and really don’t get pass this, almost, tunnel vision. But you need to widen your perspective to achieve the legacy that your years of work deserve.
I define succession as ‘enabling the compounding of wealth from generation to generation while ensuring family unity, individual growth and a sense of contribution’.
In this, the key phrases are:
- Compounding of wealth
- Generation to generation
- Ensuring unity, individual growth and a sense of contribution.
I believe you should think of succession as establishing a process and culture, which allows and supports the growth of family wealth over generations as the family grows. Individual growth and a sense of contribution are critical elements to underpinning family unity. And if there is not a strong unity, you can almost be guaranteed that wealth will be dismantled in the next generation.
The business and the realisation of its maximum value, whether by sale, transition, or some other means, are important elements, but not the core, of succession. #familybusinesssuccession #familybusiness