I recently spoke at a seminar on the subject of buying and selling a business. One of the most common reasons that sellers don’t get the price they want is that they wait until the last minute before they’re ready to sell. That is, they wait until they’re burned out, bored … or dead (in which case, yes, it’s the estate holding the sale). Particularly with service-based businesses, that’s a huge blow if the company is inextricably identified with the owner.
Same thing happens with family businesses, too. Whether you call it “exit strategy” or “succession plan” the issue is the same: the family members don’t talk about what the business will look like when the founder is no longer involved — for whatever reason. The founder may want to retire early, pursue a different dream … or die. What will happen to this valuable asset?
In his NY Enterprise Report article, “Your Succession Plan Blueprint,” Rick Raymond offers several sound steps that family businesses can take. They’re simple, but not easy — or else, all family businesses would be doing them:
- Start early. It’s never too early (or too late) to be thinking about the need for change and transition in your business.
- Communicate. So often, a family business fails to make the transition to the next generation for lack of a conversation about who wants to be involved, and in what capacity.
- Prepare the next generation. Dropping a business on the lap of an unsuspecting relative is not exactly a recipe for success. Find ways for them to work in the business — as well as outside of it, for a fuller perspective.
- Bring in outside help. Family issues are thorny at best. Outside advisors can help mediate disputes and convey difficult information in a way that doesn’t harm the family relationships.