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Your family business is your creation. There is no better way to say it. There may have been others before you. And, there will definitely be others after you. You can’t run your company forever. Someone must pick up the baton and move it forward.
You do have choices. After all, it’s your company.
Sell - You could get it ready and sell it. For many business owners, this presents itself as the logical choice. Unfortunately, they don’t always reach that conclusion until late in the game. The business may have already begun to go stale or decline. Millions in value are lost from any such decline. And, there is the lost opportunity. If you decided to sell today, and begin the process today, it almost goes without saying that you could have added handsomely to your final sales price had you made that decision three years ago. That is, if you’d had that much more time to get into optimum position. You can’t go back in time. The message is, if you are going to sell, figure that out early if you can.
Sideways – If you look at a line graph of the life cycle of a typical family business. If you just consider the realities. You know there is no sideways. Just never happens. It’s sell or grow. Sideways always turns into decline.
Decline – This is the default choice. It is a very popular choice, if evaluated based on frequency. An extremely unpopular one as the family looks in the rear view mirror at all they have lost. The message here is, if you aren’t prepared to do all of the things you need to do, make a plan to sell.
Grow a little – Many of you effectively choose this route. You have a good business. You put good people are in place. You make your plans. And, the business continues on a respectable upward path. Perhaps you don’t fully capture the opportunity ahead. But perhaps a more modest steady go strategy is absolutely the right one for your situation.
Take it to the next level – You may have a business that is so well positioned. So strong, and in front of so much opportunity, it would be a shame not to truly excel. Perhaps you can see that if you are the one who got it to this point, there is a next generation that can take it even further. Perhaps you can see that generation tapping into everything you have to offer, and bringing something new that is different from you. Additive. This is the one that gets exciting!
Have a Plan
If you are going to sell in three years, have a plan for that. Your decisions and actions must support the end objective if you are to optimize your results. If you intend to keep it as a family business, your need for a plan becomes much more critical. And, a whole lot more challenging. There is a big difference between clarity and confusion. It is the difference between creating everything you want, and struggle and disappointment.
The First Problem - Your Successor
We start with your children. Some are in the business and some aren’t. They typically wear a lot of different hats: employee, officer, owner, family member, board member, fiduciary. Unfortunately, they tend to get those roles mixed up. They see all those hats as one big hat. This is where a lot of confusion and problems come in. Moreover, how are you going to sort out, objectively, where your own children should fall within the management structure? How are they all going to receive, and live with those decisions?
Here is the bottom line. You must have an A++ successor. If that is your kid, wonderful. If it isn’t, you need to have some very clear conversations with him or her. There must be ABSOLUTELY NO MYSTERY. A little caution here. I can ask you and you’ll likely say something like “Yes, I think we are fairly clear.” Then, I spend time with the kid and other company leaders, and find out it is not so clear. The kid is probably not a kid anymore. He or she is holding out hope for a role that he or she may not really be up to. And, you are still toying with the idea. Another critically important message. It won’t work. Family business is tough enough. There is no room for cutting corners, lack of clarity, or lack of willingness to deal with the tough and squishy. You just can’t. You must get comfortable with the uncomfortable.
Another little message worth inserting is this. It’s OK to go to an uncomfortable place, so long as we know it’s safe. That’s key to creating change. Invite yourself and others into uncomfortable, just make it safe and positive to go there.
Let’s say you find your successor from the outside world. Someone who is just outstanding. This person will, in a certain respect, become a part of your family. Much of everything you want for your family, your legacy, and the continuation and expansion of your creation, rests squarely on his or her shoulders.
This is that person who will learn from you. But will also bring a whole lot you don’t have. That is what you want, not another you. Your dream is for your baby, your company, to be half again as big as it is over the next half dozen years. Bigger and better than ever before.
But know he has his hands full. This family business world is a whole new animal. He is busy trying to bring the best of everything he knows from the “outside world” and fit it into his new world. That is, your business. The world all of you share right here and now. You found somebody who really has something to bring to the party. He is going to build a business you can all be even more proud of. He will take it to that next level. But he’s learning to navigate new waters. He is creating change, as a new outsider, in place where change may often be quite uncomfortable. And, downright frustrating.
The Second Problem - You
Success hinges directly on your ability to turn loose. It’s more than turning over control. Your whole world is changing. You must change. Back to what I said about family members being confused about their roles. It is reasonably easy for you to come to terms with the idea that you can’t run your company forever. Somebody must replace you as CEO. But what does that look like? What have you tried already that didn’t work? What more subtle, yet powerful forces are at work that stand squarely in the way of everything you say you want?
What if your new CEO decides he or she is just not cut out for running a family business? That's always a risk. For that and other reasons, this has to be the successor’s show. The #1 reason succession plans fail is the senior generation management cannot fully support the transition. You know you must turn over the reins. You are committed. You just struggle with learning to not be who you have always been. Not operating in the way you always have.
The Conversation You Are Having with Yourself
I see the world through a lens shaped by 35 years of business experience and a Master's degree in psychology. As a coach, I know we have to be able to examine the conversation you are having with yourself today. It needs to be different than your historic conversation. You know you aren’t officially the CEO any more. You do understand you are in a different role now. That your life is changing before your eyes. You are probably doing a good job of implementing your transition vision. You may have, say, 80% of everything dialed in just right. That other 20% though is the difference between success and failure. It is darn sure the difference between taking full advantage of the opportunity in front of you, and unnecessary struggle.
On one hand this is not all that complicated. On the other, it is not easy. Changing the conversation you are having with yourself is a process. Figuring out those little pieces of the puzzle that are obscured, question marks, thorns in someone’s side, and so forth, is perhaps the art form in the equation. But it is critically important. Unless you and everyone around you are really, really clear… Well, if you aren’t all clear, you’re confused. If your communication is only 80% or 90% of what it really needs to be, you’re all confused. You can’t be partially clear and call it clarity. Without clarity, how can you get to an effective vision and plan? How can you, meaning your leadership team, ever get to true and powerful commitment?
The successor has his work to do as well. I talked earlier about a natural struggle with him or her fitting into this brave new world. The conversation he is having with himself includes things like: “It shouldn’t be this way.” “I don’t know if I can do this long-term.” And more. So, the successor CEO, has to clean up that conversation. Has to learn acceptance. Not necessarily to like a particular circumstance. Just not to be upset or frustrated by it.
High Stakes/Big Rewards
Great companies find great opportunity in the midst of transition and relative uncertainty. The winners get it right. They make the investment. They make the place safe, because where you are going will not always be comfortable. They slow down enough to charge the right hill at the right time. They get it right because they can. These great companies, and creators like you are not satisfied with survival or “pretty good”. You see the opportunity in front of you. You are ready to do what it takes to line up with it in every way possible.
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