Conflict, divorce, illness or a premature death of a key member in your family business are major potential threats to your business as well as fragile family relationships. A proactive business leader can help avoid catastrophic situations by separating the life-cycle of the business leader from the life-cycle of the business. This is a key element -- recognizing that the business is a distinct and separate entity that is (hopefully) not fully reliant on the leader.
As time goes by and your business grows, it may outgrow the management skills of the owner or there may be a failed attempt at passing the baton (e.g. a succession plan). Proactive discussions and decision-making that preserves relationships and the investment in your business can help mitigate your worst nightmares – however you choose to define it.
"Some people don't like change,
- Examine potential threats -- People-related situations tend to have the most fire-power, or potential to disrupt a business, let alone personal relationships, finances and the continuation of your business.
- Examine potential solutions to mitigate the potential threats.
- Create a list of pros and cons of a defined succession plan. While planning takes time and sometimes money, the benefits might include clarity of intentions, business continuation and harmony amongst employees and family.
- Understand It Is a Business – Understanding the distinction between the life-cycle of the family business leader from the life-cycle of the business itself can re-focus management on the needs of the business for long-term sustainability. These two life-cycles are not necessarily the same, nor should they be.
- Documentation is important to protect the business and relationships in the event of a sudden change in circumstances (i.e. death of the leader). Policies and procedures and legal agreements are generally required to help protect and ensure a smoother operating business in times of crisis.
- Develop a Team Approach - Qualified advisors can objectively help organize this sometimes daunting process. The team can include strategic planners, accountants, lawyers, insurance specialists, conflict managers, business coaches and so on.
A great indication of a family business leader’s success is when a team has been built that can competently take the business forward, in times of planned succession or crisis. Providing a sound plan can help provide a safety net if family dynamics spiral out of control.
Some family business leaders may have a need for the business to be dependent on them. Generally, this is not in the best interest of the business, and speaks more about the personal needs of the family business leader than the needs of the business.
View your business as a separate entity, rather than an extension of yourself, creates an opportunity for your business to move forward and grow in a manner that is in its own best interest -- and ultimately, to the benefit of your family.
Know Your Numbers. Know Your Business.