Family business succession: 12 steps

The process of family business succession planning may take five years or more. Any family business that starts this process only at the time the need for succession arises will find that it is too late.

- ELFREN S. CRUZ

This failure is one of the primary reasons why fewer than 25 percent of family businesses pass on to the second generation and as low as only five percent make it to the third generation.

Another misconception is that planning and successful succession are one and the same process. These are two different processes. Transferring to the next generation or succession must be viewed as a lifelong and continuing process which will continue even after the first generation passes away.

In my conversations with many family business owners, they are often worried about the continuity of the business, but not worried enough to do something about it. Often, it is only the reminder of their mortality - a heart attack, the death of a close friend or relative or a bitter family argument - that finally persuades them to start thinking about succession planning.

However, before or even during the planning process, there are many stops and starts, even if the ownermanager knows that planning is the right thing to do.

Emotional forces often prevent the owner-manager from facing the issues. Again, in my conversations, I am often told that there is a succession plan but it is not written and is only in the owner's mind. It is also a plan that has not been thoroughly communicated to family members.

Family business consultant Ivan Lansberg accepts the complexity of the succession planning process.

However, he advises that 12 tasks must be accomplished during continuity planning.