If you are like every other entrepreneurial business founder and owner, you are hoping to create a successful future, both for yourself and your loved ones, as well as for the next generation of leaders of your company (who in some cases might be your own children). Unfortunately, many entrepreneurial businesses—and most family-owned and run entrepreneurial businesses—fail to successfully navigate the succession and transition process. Only one in four such businesses makes a successful transition to the second generation, the others failing or being sold before the children of the founders get a chance to take over. Of those that do last to the second generation, only one in three makes a successful transition to the third generation. These are not encouraging statistics.
In our book, Changing Places, Moss and I used some helpful narrative examples from our practice to bring to life both the potential problems faced by business owners and the practical solutions they have adopted. These “war stories” are my favorite parts of the book.
Chapter 3 has 2 great stories. Here is Delores and Marty’s.
Your Transition Advisory Team–Informal Boards
In some situations a formal “board” is not necessary. Dolores and her brother Marty worked on and off for the company their father Anthony had started 50 years ago. Their grandfather and great-uncle had also worked in the company, and now their uncle worked there too. It had always been Anthony’s wish that Dolores and Marty would someday come back and take over.
At the time of writing, Dolores was in the process of buying out the majority of company, and Anthony was also transferring portions to both Dolores and Marty. Though Dolores and Marty were away for as much as twenty years working in other industries, both are now back and ready to let their dad take it easy.
They look for advice from their vendors, accountant, banker and Dolores’ father-in-law, a successful businessman who is now retired. While Dolores and Marty had never thought of them as their “board”, they serve the function admirably.
Their banker invites them to his box at local professional sports events, where they meet many other small business owners in the area. They have also found that attending those events has been a great way to network and discuss what works and doesn’t work for different businesses. It also allows their sons, who have an interest in joining the company, to meet other small business owners.
Every story in the book paints a vivid picture of what to do and don’t do. I’ll have another story waiting for you in the next post.
Check it out: “Changing Places: Making a Success of Succession Planning for Entrepreneurs and Family Business Owners” (published by AuthorHouse). Feedback please to: firstname.lastname@example.org
Dave Franzetta and Moss Jackson pen new action planning guide, Changing Places, for small business owners facing the conflict of generational leadership change.
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