Because of the well known ambivalence to succession planning in the family business it may, at times, be preferable to approach the exercise as part of an overall strategic business planning or business continuity planning process in which owner-mangers can see some immediate benefits.
Strategic business planning leads to succession planning.The objective is for the owner manager to explore options and strategies which lead to continuing growth, profitability, and family leadership. Improving the business and its performance makes the enterprise a more valuable asset.
Benefits of strategic planning.What are some of the benefits of strategic planning in the family business? Strategic planning:
- Provides family business owners and their prospective successors with the opportunity to develop a family vision for the future and a framework for the evaluation and choice of business and family goal thereby focusing the energy of family members on accomplishing agreed objectives.
- Provides the opportunity to recognise and exploit unique strengths or competitive advantages of the business and establish the parameters for business growth and increased profitability to ensure that the business does not underachieve its strategic potential.
- Provides answers to tough questions about competition and re-investment and a framework for cash flow and financial budgeting. This, in turn, provides a greater diversity of strategic options and an edge against competitors who do not have plans.
- Encourages enhanced communication on vital family business issues and promotes the growth of shared decision making, team management, consensus and commitment. In turn, this process strengthens the family business and increases its chances of growth and continuity and creates the motivation that sustains family and business through difficult times.
- Provides valuable business education and training for prospective successors by integrating the next generation of owners and leaders into the family vision, while simultaneously developing their effectiveness for implementing future business strategies.
Maximising the value of the business.The underlying rationale for business continuity planning is maximising the value of the business, whether the ultimate outcome for family business owner-managers is the sale of the business or passing it on to their heirs and successors.
Sources: Ward J.L. 'The Special Role of Strategic Planning for Family Businesses.' Family Business Review, 1988, 1(2), 105 - 117 and Ward, J. Keeping the Family Business Healthy, 1997, Business Owner Resources, 210-214 to both of 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