- By Ian Bradley
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In my work with family businesses, I find that succession planning is like taxes- it’s painful to do but the consequences of a failure to act are worse.
The pain is related to the myriad complexity of financial, legal and tax succession considerations but what is even more daunting to family members are the psychological challenges.
How does the founder, the hard-working and successful CEO, step away from the things he or she has created? What comes after passing the torch – especially if the founder’s identity and sense of worth are heavily derived from the business success? How does one prepare the new generation to take-over? What competencies and personality features are required to continue the business success? Do the successors have the drive and skills of the founder? And most critically, how is the successor chosen?
The answer of each of the above questions touches upon balancing the harmony of the extended family with the ongoing financial success of the enterprise. This balancing act is tough.
Therefore, it is no wonder that these crucial decisions around succession are postponed indefinitely or until the fragility of the founder creates an erumpent crisis described by one researcher, Bass, as “demographics inexorably working their will”.
In the following series of posts I will enlarge upon some of these issues and describe the approach that I take in my consulting practice with family businesses talking succession.
However, the long and the short of it is: start the conversation now.