Susie and I always say that it takes a commitment to healthy relationships, positive communication, and a common vision to run a family business effectively.
The leader of a family business must be able to understand and foster RQ, Relationship Intelligence not only within the family but throughout the company. As we’ve discussed, the complex dynamics and multi-layered relationships that exist in family businesses make company leadership exceptionally challenging.
And this is never truer than when it’s time to transition a family business from one leader to the next—you could be adding salt to an already festering wound.
Business transitions are tricky enough anyway, but when you add the element of managing important family relationships on top of it, it can get downright challenging.
If you have a family business that you know you’ll need to transition one day—here are five tips to doing it well.
- Prepare early. We’re talking years in advance. This gives you a chance to lay out the expectations clearly, talk to everyone involved, and make sure you’re all on the same page. Determine clearly the criteria you’ll use to decide how and to whom you’ll pass the business.
- Get the right people in place. Be sure that the people you want to take over after the transition are prepared and poised to jump in. This can’t be an entitlement thing. Be sure you’ve got someone who’s BOTH willing and able. One or the other won’t do—he or she must consistently demonstrate both willingness and ability. Finally, he or she absolutely must share the company’s values.
- Have a clear vision for your business and a set of values. A vision is absolutely vital to the long-term success of any enterprise, and your family business is no exception. This is especially true when leadership of the company is about to change hands—it gives the new leader the star toward which to steer the ship. Also, a set of 5 – 7 clearly spelled out, simple values helps you find the right people and gives the new leader boundaries within which to operate.
- Create a formalized succession plan. Succession plans are comprehensive, step-by-step outlines of everything that needs to happen in order to ensure an effective transition. You may need to work with an experienced advisor on this—but DON’T neglect it!
- Be ready to deal with conflict in a healthy way. These kinds of transitions are always stressful, so be prepared to manage conflict in a healthy way. Encourage family members to speak directly and honestly about their feelings around the transition. Help everyone be clear on the ultimate goals so that you can move through conflict to find resolution.
Working with an experienced advisor during periods of transition is almost always valuable (not to mention that it always pays for itself many times over)—so feel free to reach out to me for assistance. I can help you put together a succession plan that’ll allow your business to keep supporting your family for generations to come.