If Tragedy Strikes, Are You Ready?
If you don’t have a succession plan, you’re not alone. Less than 30% of family businesses have prepared a formal succession plan. Why?
- Too much process
- Avoid the sensitive issues and difficult decisions
- Immortality: we never accept it will happen.
- Mentality that succession “just happens”
- Many feel the process is just a formality
- Some feel it’s not a high enough priority at this time
- Many feel it is an event that happens too far in the future
Create a Sense of Urgency
One method of motivating family members to discuss these sensitive issues is to create a sense of urgency. Discussing case studies of family businesses that didn’t have a succession plan in place can show family members the consequences and impact on the family and the business. Posing the question, “What would happen if the founder passed away?” can help move the issues into our short-term thinking and make it more relevant.
Keys to creating a sense of urgency:
- Horror stories: family businesses that failed without having a succession plan
- Crisis contingency: what would happen if the founder was suddenly incapacitated?
- Financial planning: comparing the differences in family wealth with and without a plan
Two things that often help to move the succession planning process forward:
- Realizing the comfort and security of having a plan in place in the event of a crisis
- Understanding that the plan is not a final document and can be modified at any time
Sometimes it takes a crisis to motivate family businesses to prepare succession plans.
Reprinted with permission of The Center for Family Business at Northeastern University.
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