When someone starts a business, they don’t always have the end in mind, but the end will always come. Complexities are inevitable when someone’s time ends at a company, especially if family is involved. One of the areas that can cause the greatest areas of conflict in a family business is what happens to the business after the current generation retires.
I often joke that the goal in family business is that at the end of the day, we are all able to sit around the table at Thanksgiving and still enjoy being around each other. That’s why it’s so important to get ahead of difficult conversations, if possible.
I think we can all agree, sometimes starting a conversation is the hardest part of it. In my mind this is especially true for succession planning. Succession planning is full of emotion. In so many of the conversations that I have had with dealers, the current owner has put blood, sweat, tears, and money into something that they have seen grow and change. Moving that into someone else’s hands, no matter how capable, takes a lot. Here’s the thing: succession planning should never be a secret. It’s important to talk about the plans openly and frequently.
So, how do you start the conversation?
Pick a place that where you can have the conversation and won’t be interrupted. Your business location is probably not the place to do this. We encourage families who work together to go out to lunch at least twice a month, if possible. This allows you to discuss business away from the business. This would be a great time to have a conversation about next steps for the business.
Ask questions and listen to the answers. It sounds easy, I know, but it’s harder than you might think. Both the current generation and the next generation need to be open to what the other has to say. By asking questions like, “Where do you see this company in 10 years?” or “How do you hope to be involved in the company down the road?” will bring clarity to both sides.
Use others as an example to bring up the conversation. If there is another business that has recently gone through a transition of leadership, talk about what went well or what could have gone differently. Learn from their success and failures to make your situation positive for everyone.
You won’t have a whole plan developed the first time you talk about it, but it’s important to understand how the current generation and the upcoming generation can come together to make the transition smooth for everyone.
Not only should both sides understand how the plan will play out, it’s also important for the other employees to understand the basics of the plan as well. This allows clarity on everyone’s part of who is leading the organization at any given point.
Succession planning involves talking about death and money, which are both subjects that are commonly taboo in families. It can be a challenge, but by addressing the conversation sensitively it can bring a family together and keep a business moving forward.