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Bringing the family business community together

Six Family Business Mistakes

6th May 2019 Jo Macsween, Vistage Chair

Jo Macsween shares her insight into some of the mistakes that family businesses make when going through the transition process from one generation to the next.

By the time Jo Macsween became joint MD of Macsween Haggis in 2006, her company had evolved from a single butchers shop into a wholesale haggis business supplying the UK’s biggest high street retailers.  As she explains, "The death of my father in 2006 had a profound impact on how I viewed life and prompted an inner dialogue about whether I wished to stay for the remainder of my working life. So, in 2017, after 23 years at Macsween, I exited the business to work as a Group Chair at Vistage." 

"Having been through two successions, I’ve given some thought to the most common mistakes made by business owners during the process." 

Mistake #1:  Putting off succession planning

My main advice here would be to start succession planning at the earliest opportunity.

Do not underestimate how long the process will take. You have a business to run and that will always kibosh your best intentions.

Succession planning is a complex process that can involve a number of different family members. Legal and financial issues need to be resolved in a way that leaves all parties feeling satisfied – which requires detailed planning and constant communication.

Mistake #2:  Choosing not to plan

Business owners shouldn't view succession planning as the act of finally agreeing a definite retirement date for the owners. Instead it needs to be seen as a process that will require repeated discussions, as all parties build toward desired outcomes.

By having plain, forthright conversations about the succession process, teams can build a solid foundation on which to achieve their business’ goals. There should be some agreed milestones along the way, but business owners should be cautious of rushing to the outcome, without giving the process due time and attention.

Too often people just fall off the edge of a cliff, the exiting senior generation leaves - or doesn’t leave - and then you’re trying to reverse-engineer your succession process, which is a mess, and causes so much ambiguity in the business.

To make the process seem less overwhelming, I recommend treating succession planning as you would any other major project, such as a physical expansion of the business’ premises. Business owners need to create a project plan with key milestones, and allocate time to go off-site and focus solely on moving the project forwards.

Mistake #3:  Not seeking independent advice

Experienced business leaders often think they can create a succession plan without outside help.

One of the strengths of family-run businesses is the ability to rely on the trust and loyalty of a close-knit group of family members. However, that can make it difficult to seek outside help for advice on succession planning, because issues involving money, death and inheritance can be seen as private matters that should be dealt with by the family alone.

Speaking to peers in other businesses during my own exit from Macsween was crucial for receiving dispassionate, and objective advice from people who had been through the same process. Vistage provides a similar forum – with many of our members joining to benefit from the support of others when exiting their business.

Owners should also be prepared to employ a family business consultant. There are people who can support businesses and facilitate this very complex process, and you do need some objective help from time to time because everybody’s voice needs to be heard.

Mistake #4:  Failing to communicate

Families should invest time in understanding how they should communicate. This may sound counterintuitive, as we assume that nobody knows us better than our parents or siblings, but families often fail to understand the intricacies of each other's communication styles.

When I was at Macsween, we all did personality profiling tests to help better understand how we should communicate with one another to minimise conflict and achieve our goals. That was time and money well spent.

Mistake #5:  Failing to define job roles and responsibilities

These personality tests can also be used to gain clarity on the skillsets of family members and the roles for which they’re best suited. Often family members don't have a defined job description, so lines of accountability become blurred, particularly as the business moves towards the point of succession.

It can be unclear at what point mum or dad has stopped doing one aspect of, say, finance, and the junior or next generation begin. This causes tasks to be overlooked and creates confusion for the wider team, but it can be avoided with effective planning.

Mistake #6:  Failing to ensure everyone is comfortable with the process

It’s important that every stakeholder in the succession process is prepared to have these conversations. The period before an exit represents a dynamic situation where often one side is less willing to continue the succession planning than the other. Teams therefore require tact and patience to avoid conflict.

It’s an emotional process that requires a lot of resilience, and a commitment to talk about issues that frighten people at the beginning. There’s money and there’s death. It doesn’t get much bigger than that.

About the author - Jo Macsween is a Vistage Chair.  Vistage is the world’s leading business performance and leadership advancement organization for small and midsize businesses. Across 22,000 members, Vistage connects high-integrity business leaders and CEOs with Peer Advisory Groups and dedicated mentors (Chairs) for senior executive growth and business development that benefits companies, employees families and communities. Find out more at www.vistage.co.uk

 

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