A Plan For Succession - Short Term and Not Strategic

The New York Times The Beginnings of a Succession Plan  got me thinking about “succession” which is a term that gets tossed about by many,  without deeper thought as to what it means.

 

What is Succession?

Succession can be short term… meaning insuring short term business viability due to sudden and unforeseen circumstances. Although what many people view as unpredictable is really what family business transition specialists call predictable transitions and clearly one of those is death of the founder. 

However for many family businesses, succession means passing the baton to the next generation. The definition of generation gets “muddy” but the consensus is 20 to 25 years. So when dealing with succession,  core strategic issues come into play which unfortunately many do not want to deal with.

Shouldn't a major goal for succession be the determination of the viability of the business for the next generation… out 20 plus years? 

 

Family Businesses are Not Perpetually Viable

We now have what I call structural ambiguity present in the economy and the business environment. Assumptions that were prudent in planning and forecast in the past probably are now mostly irrelevant. And most of those in the helping professions, accountants, financial planners and attorneys get stuck in the tools of legal and financial succession. 

Far too many family members and their advisers assume “perpetual business viability” and the next generation simply cannot assume business viability for another 20 years. So just because the business may have been family owned for several generations past, I say… so what? 

 

The Overlap of Family and Business

The above is most difficult to do since the Family-Business overlap is so strong and the “family” component is highly emotionally charged. I hope to see more discussion on succession that addresses the strategic viability of family owned enterprises for this is the responsible thing to do for that next generation so they are not saddled with businesses where the window of opportunity may be closing or has already closed.

Is the window of opportunity closing at your family business?

You may enjoy reading The Most Important Family Business Goals .

All the best!

Dom Celentano

New Jersey Family Business Advisor