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Family business succession is hard – because it’s family!

Succession Planning

Family business succession is hard – because it’s family!

By , March 5, 2021
family succession

Family business succession is hard – harder than other privately owned business. Why? Because it’s family!

Families are complicated, relationships are literally lifelong and deep, but often tainted with some “experience” – the niece’s wedding when the Matriarch ignored our side of the family, the Christmas lunch when the smart-arse nephew accused Dad of promoting his own family members way above their ability, the BBQ when the two older brothers fought over the CEO role and completely ignored the older (and smarter sister).

The issue is actually simple – people are wearing multiple hats and cannot separate the roles. Family member, shareholder, employee, board director, father, manager – it is not uncommon in family for people to wear 3, 4 or even more hats. When having a business discussion about a promotion, as a senior manager, it is very hard to ignore the fact it is your daughter being promoted. When discussing payroll changes in the business, it is hard to ignore the effect this will have on your dividends. Using the hats in meetings to clarify which role you are playing is a great technique: which hat are you wearing now? Can I ask you to take off your family hat and wear your manager hat?

The other significant issue is family members, often Dad, staying on far too long “waiting” for the right time to handover, “waiting” for the kids to show they really want it and are ready, “waiting” for…

“The dinosaur is having one last roar at the meteor before it wipes him out.” – Kendall Roy, Succession

The solution is to design and structure a family succession plan, a documented succession strategy over 5 to 10 years, including an organisational chart for today, 1 year, 3, 5 and 10 years, showing each person’s progression thru the organisation (and agreeing milestones for progression, not just time-based). Each person should have a personal plan – which roles? what training? Both formal and on the job experience is needed for each progression. What qualifications are needed to hold the “licence”?

Then it’s about communication – internally, externally, business, family, shareholders, employees all need to be informed and updated thru the implementation. Constantly review and update, hold people accountable for their milestones, don’t let people hold on too long, make sure the financial arrangements are clear and documented.

Family succession doesn’t have to be a blood sport!

Craig West

Craig West

Executive Chairman | Succession Plus

Craig West is a strategic accountant with over 20 years of experience advising business owners. His background as a CPA in public practice has provided invaluable experience in the key issues of concern to business owners.

In March 2014, Craig was appointed Executive Chairman of the SME Association of Australia, Australia’s largest small business organisation representing over 300,000 business owners.

In October 2014, he was awarded the Exit Planner of the Year at the Exit Planning Institute Annual Conference in Texas, USA, due to his innovative development of an exit planning process to help business owners maximise business value and achieve a successful exit.

Craig’s proprietary structure - a Peak Performance Trust - has won the Australia-wide award for the Employee Share Ownership Plan of the year twice in four years.

In November 2018, Craig launched SME Experts in partnership with Mark Bouris’ Mentored on Podcast One and quickly grew the monthly podcast audience to over 26,500 downloads; in October 2019, he released a new podcast focused on medium-sized businesses - Mid-Market Matters.

In July 2021, Craig joined the NSW Committee for STEP (Society of Trust & Estate Practitioners) – focusing on advising families across generations.

Craig has also launched a SaaS platform, Capitaliz (which captures the 21-step process), to assist other advisers internationally deliver advisory services at scale.

In November 2021, Craig was appointed Executive Chairman of NSW Leaders, a business mentoring group for leading NSW businesses.

In July 2022, Craig West received the award of Doctor of Business Administration for his research thesis titled “Examination of the key factors driving business exit options in Australian Small and Medium Enterprises.”

Craig is passionate about encouraging business owners to think strategically, maximise the value of their business and achieve a successful exit.

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