Whether or not it is intended that the business continue as a family business, firms that plan are more likely to achieve continuing growth, profitability and family leadership.
Planning as a way of clarifying both family and business goals.A firm with strategic plans incorporating succession plans and with qualified and committed managers in place is likely to be a more valuable asset than a firm requiring either replacement managers or a turnaround. The true value of planning is not so much any documents produced, but the process of identifying and clarifying both family and business goals and objectives and how to achieve them.
Main benefits of continuity and succession planning.- To increase the economic value of the business and provide owners with well thought out exit options and strategies.
- To safeguard the long term health of the business and to revitalise strategy.
- To identify, select, prepare and install successor(s) and map out other family members' roles in the business.
- To protect and reward loyal employees and perpetuate employment opportunities.
- To prepare founder(s) and their spouses for retirement by building up substantial interests outside the business to look forward to and to provide for post retirement financial security.
- To make the most of family-business assets, preserve wealth, and provide one's children with opportunities. To perpetuate and pass on to subsequent generations some of the rewards of entrepreneurship and the special privileges of ownership such as:
- the opportunity to manage capital and to make things happen in the community
- security for family members to take chances in other careers or ventures
- autonomy, freedom, and control over one's destiny
- personal growth and the expression of individual creativity.
Creating options for family business stakeholders.These, and other more business specific reasons for continuity and succession planning, enable family business owners to feel in control because they have a clearer idea of where they are going and how they propose to get there. Forward planning explores, creates, and maintains options for all the stakeholders in the family business: owners and their spouses, successors, the family, and the business.
Sources: Aronoff, C & Ward, J. Family Business Succession: The Final Test of Greatness. 1992, Business Owner Resources; Bieneman, J.N. The Howarth International Guide to Total Planning in the Family and Owner Managed Business.1997; and Bork, D. et .al. Working with Family Businesses 1996, Jossey Bass Publishers to which texts readers are referred.
Author Credits
Lucio Dana is a family business adviser & facilitator; lecturer in Family Business Programs at Monash University; and Managing Director of Creativity in Business P/L. which trades under the business name Family Business Dynamics. He is co-author of Family Business Succession Planning: A 10-Step Guide, 2000 Centre For Professional Development; Email ledana@go.com; Ph/Fax: 03 9841 5115