When is the right time to hand over my business? How do I find the right successor? How do I secure my own and the company’s financial future? What will become of me and my family once I’m no longer a business owner?
Many businesses get stuck because the owner is daunted by these questions and would rather not deal with them. The very personal fears of the men and women at the helm of companies often disappear behind key figures and balance sheets—or are hidden behind them. That’s why it’s good to have a trusted advisor who can help you overcome your fears and make decisions. Here are three examples of how people can become a key factor in successful business succession.
Case 1 – What Comes Next?
The 66-year-old head of a medium-sized company in the specialty machinery manufacturing sector keeps putting off meetings with potential successors, claiming he has no time due to his day-to-day business obligations.
The business succession consultant conducts a confidential meeting at a neutral location to gain insight into the entrepreneur’s personal reasons and to determine the best course of action moving forward. This initially involves a consultant-facilitated discussion with the entrepreneur’s wife, during which fears are openly addressed and shared perspectives for the next phase of life are identified. It becomes clear that the entrepreneur is reluctant to step down because he doesn’t know what role he will play in the future within his family and among his friends and acquaintances. Furthermore, he is unsure of what to do with his newly gained free time.
This example illustrates how important it is for entrepreneurs to develop a plan for the period following the handover. Above all, it helps to view the change not as a departure from the company, but as the beginning of a new and positive phase of life. Two factors are particularly important here: being honest and open with oneself, and having a fundamental willingness to hand over the reins.
Case 2 – Securing the Company and Family Harmony
A family-owned business in the building materials industry is seeking a long-term successor for the managing director, who is a member of the family. A son of the company’s former founder, who is employed by the company, hires a business succession consultant because he does not see himself in the role of future company leader.
The first step is to clarify the expectations and needs of the company, the business family, and the managing director. At a family conference facilitated by the consultant, all parties involved have a chance to speak, allowing them to better understand one another and then work constructively—and on an equal footing—toward a shared solution.
It becomes clear here that the succession issue is often a challenge on multiple fronts. One must not only consider the company but also maintain family harmony. This is only possible if one can adopt and balance the different perspectives of those involved. Only then will everyone ultimately have realistic expectations and work together to achieve a positive outcome.
Case 3 – Having the Courage to Make Decisions
A small company in the service management sector is a leader among banks and insurance companies and has a founder and CEO who is the driving force behind technology and sales. New contracts are secured almost exclusively through referrals, but now the company aims to expand into new industries and serve smaller mid-market businesses. To do this, the entrepreneur needs support. Additionally, succession planning needs to be addressed over the next five to ten years. The CEO’s two daughters are not being considered for the role.
At this stage, many details remain open. The first step is to define the path the entrepreneur intends to take. To that end, a team of consultants is holding a workshop with the CEO to clarify how he envisions the implementation in terms of technical, time, and financial aspects. There isn’t just one right course of action—there are several options. Ultimately, however, the entrepreneur must choose one of these options to reach his goal.
This case makes it clear that the entrepreneur must tackle succession planning just as he would any other complex task or long-term project. To make progress, manageable milestones must be defined in writing and achieved step by step. The business owner must take the first step and have confidence in their decision—not wait forever for an even better solution. And once the decision has been made, action must be taken promptly so as not to lose sight of the actual goal.
