Succession planning in family businesses often focuses on the choices and activities of the existing owner or CEO. Less is said to the new leader stepping into the role. Still, these new business leaders are the ones who must guide the company into this new era, and that won’t always be an easy task. Here are some tips to ease the transition after inheriting a family business.
Tip 1: Assess the State of the Family Business
Often, family businesses are run from the top down. Unless your mother or father has been engaging in a strategic succession plan for the family business, you might step into the role without knowing the company’s financial situation.
Hold a meeting with the professionals serving the business – attorney, accountant, bookkeeper – as well as the company’s leaders to assess the state of the family business. If you are not experienced in running a meeting, consider hiring a facilitator to bring everyone together and keep the meeting on course. You may also want to hire your own business attorney to perform “due diligence” on the business, so there are no unexpected surprises.
Get Help with Leadership, Conflict Resolution, and Business Strategy
Talk to a consultant who can help you make strategic decisions about the future of your business.
Tip 2: Decide Your Own Role
Some people inheriting a family business have been working alongside their relative for years, growing the company into what it is now. Others inherit unexpectedly. Still, the death of a business owner is a turning point for any business. As the company’s new owner, you have a decision to make. Will you:
- Step into the role of owner-operator
- Bring in a partner to help you manage operations
- Hire a non-equity CEO while maintaining ownership
- Sell the business
Once you decide the role you want to take, work with a consultant to create a strategic plan to move toward that goal. Whether it means identifying potential buyers or building up your leadership skills, a consultant can help you define your needs and find ways to meet them.
Tip 3: Put the Right Person in Charge
Skilled leadership is key to building a successful business. Whether you choose to take on a leadership role after inheriting a family business or not, you will need the right people in place to guide your company and support its growth. While the best succession plans occur long before the moment of inheritance, the same strategies can be used to put the right people in place after a new owner steps in.
Tip 4: Communicate Clearly with Employees and Customers
Any transition in ownership is an uncertain time in a family business. Your customers may worry that your products or services won’t match current standards. Employees may feel a loss of loyalty or worry about their future with the business. Family businesses add another layer, as siblings and relatives may feel hurt because they did not inherit the business instead of, or alongside you.
To address all these concerns and hard feelings, make clear communication a top priority. This isn’t just about making changes. Assuring employees and customers there will be consistency is just as important. When those employees are family members, communications should be empathetic and recognize their loss and grief, without giving them undue influence on your final decisions.
Tip 5: Get Help Stepping into Inheriting a Family Business
If all this sounds daunting, you are right. Inheriting a family business – especially unexpectedly – isn’t easy. The decisions you make now can affect your family, finances and future for decades to come. It can impact your family life and relationships, income, tax obligations, and career. It should not be made lightly. Work with an executive coach who can help you step into the role of entrepreneur or silent partner, or work through the complicated process of selling a family business.
David Stanislaw is an organizational development specialist with over 25 years’ experience helping heirs inheriting a family businesses step into their role. Through one-on-one executive coaching, strategy sessions, and facilitated mediation, David helps family members work together to make their family businesses grow. Contact us to meet with David to start resolving sibling rivalry in your workplace today.