Ah…complexity. Like any business, those that are family-run have their own unique challenges. In particular, planning ahead for who will take the reins when the time comes to do so. Do you have your children vying to run your business? Maybe you have an “Empire” or “Dallas” type situation happening? Or perhaps you have a child who begrudgingly accepts running the business as in “Arrested Development”? Or maybe no one wants to inherit your store like the children in “Kim’s Convenience”? Yep, there is a TV show for every type of family business situation!
According to the PwC Family Business Survey 2021, there is “an uptick in business planning for succession: 30% of family businesses now have a formal succession plan, up from 15% in 2018.” If you’ve identified a successor and have a plan in place to take over the business—congrats! But what happens when no one wants to take over the business? Maybe your children have said “No” outright or perhaps they’ve been dragging their feet and it’s becoming clear that their hearts aren’t in it. What actions do you take when no one wants to follow in your footsteps?
Your emotional state
Your first response is most likely one that is emotional. You might be thinking, “Do they not understand what I have done to support the family?” “Do they not respect what I do?” “Maybe they don’t understand exactly what we do? If they did understand, they would lead it.” “I worked so hard and sacrificed so much for this business, why don’t they feel the same way?” Or, you may be fine with your family not continuing to run the business and now have to look at next steps through an entirely different lens.
Regardless of which situation applies, you most likely will go through a grieving process, which is only natural. The Kubler-Ross theory of the five stages of loss are: 1) Denial, 2) Anger, 3) Bargaining, 4) Depression, and 5) Acceptance. The duration at which you go through these stages is different for everyone. Sometimes it takes a few months, sometimes it takes years. You may spend more time in one stage in comparison to the others. The important thing is to let yourself go through the stages. Developing concrete actions will be difficult to do if you don’t first address your grief over not leaving your family business to your child.
And do you think, you can just skip over the emotional state and jump right into the intellectual? Nope you need to address your emotions. It is important to do, as you don’t want unresolved feelings to hinder your relationship between your children, tarnish your brand, or distance yourself from finding a suitable successor outside the family. Imagine the family get together after a few drinks and unresolved emotions!
Your intellectual state
After you move to acceptance, now let’s talk about what actions you can take. PwC Family Business Survey 2021 also illustrates that, “In 2018, about one-quarter (23%) of family businesses expected that NextGen family members would be majority shareholders within five years. In the 2021 survey, this number rises to just over one-third (35%). Younger generations are strongly motivated by meaning and purpose when it comes to their career, and sometimes struggle to find these qualities in the family business, according to conversations we have had with many NextGens.” Since many family businesses are struggling with succession planning and are understanding the implications of not having family successor, there are steps you can take to make this process as effective as possible:
- Identify the key skills/competencies needed – by being able to formalize the skills needed to effectively manage the family business, you can better target the right person to assume the role.
- Manage expectations – be clear in the expectations you have. What are “need to have” qualities vs. “nice to have” qualities? Knowing these in advance will help both you and potential successors understand the path to success.
- Create a personal “board of directors” – having a personal board of directors is extremely helpful as it allows you an outlet to get feedback on your thoughts, test your ideas and potentially help determine top successor candidates. Not to mention, this group can help ground you and assist with focusing on the work that is most important.
Your Next Steps
First, you are not alone. Many families will not have a child as a successor. Manage your emotions and, most likely, it will be necessary to find outside help to process. You might talk to someone alone or with your children. Be sure to respect the emotions and move to acceptance. Once there, there are many partners who can help you create a succession plan. Remember, put on your oxygen mask first and then you can help your business!