Approximately 70% of family businesses do not make it to the second generation. This is a high mortality rate, and if they do make it to the second generation, only approximately 9% make it to the next stage. There are several causes for this to happen, and one of them is the lack of a family business succession planning.
Succession in the family business has been a much discussed, debated and analyzed issue, since it has been considered as one of the situations that most affect the company. It is considered as a problem, but it should be treated as an inevitable transition phase in any company. Succession is to test how mature the company is, how well positioned it is in the market and how ready it is to adapt to the company’s own and family projects.
Entrepreneurs who analyze the future of the company and create a succession plan ahead of time achieve a successful transition. While entrepreneurs who live day-to-day operations without planning and measuring the direction of the company may have greater problems in the generational handover.
There may be founders who want to maintain control of the company’s power and decisions, as well as mention that they are tired from years of work but do not delegate responsibilities and do not accept support to carry out their tasks. Such a situation would further complicate the succession plan.
The strategic plan must go hand in hand with the succession plan, since the new decisions will be taken by the successor and with a plan already established it will be a much easier path to follow since the company was already heading towards a pre-established place.
The succession is not an easy situation to perform, so it is important that all members involved have an active, transparent and orderly participation to generate a harmonious transition within the group.
The complex nature that surrounds the family business makes it a special organization due to the three elements that compose it. The company, the family and the ownership give the unique value to this type of business, and researchers in this area have given more importance in recent years to the analysis of these organizations to know how they behave.
Like any other business, family businesses have or should have a business plan to help them manage and grow their business. However, family business planning should have a greater focus on the family aspect, rather than the business.
Here it is mentioned why this should be the case.
If the business is doing well, it will tell you with the revenues and profits, and if the business is doing poorly, it will tell you with the losses it has. It is a two-way equation.
However, in a family business you have to interact with the values, thoughts, ideologies and feelings of the family members. It is said that you should put feelings aside and just focus on the business when you are inside, and vice versa when you are at home.
But, what really happens is that many families involve everything, so you must be smart to control emotional situations and prevent them from impacting the business.
The needs for food, a house, transportation, school, new births, and other family members become important to those involved. If the company is not financially strong enough to provide the necessary income for the family, then it should be planned how they can make it outside the company, or what they should do to make the company grow.
Many times the mistake is made that the company’s petty cash is the family’s petty cash, and if it is not well controlled, it can decapitalize the needs of the business.
If there are arguments or divisions in the family that are working within the business, this may make it difficult or even result in not working in the same direction.
Prioritizing harmony in the planning of the family business could involve the members to look for a way to generate teamwork, with a correct division of labor and established roles.
Undoubtedly, it will be easier to work in a healthy work and family environment.
In this article I will take as references different bibliographies that mention what is included in the strategic planning of a family business. Within the references, important aspects that a strategic planning should include are mentioned.
The main authors on strategic planning are John Ward, Stephen Lawrence and Frank Moyes.
The authors Acosta and Perez (2010, P.85) in their research on Strategic Planning in Family Businesses, refer to Ward mentioning that the methodology for the development of a plan are the following:
Authors Lawrence and Moyes (2004, P.3) mention that the main elements for a successful business plan are the following:
Therefore, a reduced methodological framework for the creation of a strategic plan for a family business can be the following.
Based on these sections, it is possible to obtain the approach of the specific objectives of the project that a company needs. The ideal would be to complement the plan with the realization of the family protocol to cover specific needs of the family.
