Is succession a viable alternative?
Determining whether succession to a family member is a viable alternative seems an obvious first step but doing so is not always straightforward. Many business owners do not carefully consider all the issues when deciding whether succession to a family member is a viable alternative.
Business owners often have a plan in their own mind – take the case where one of the children has been active and effective in the business. In such a situation it may seem obvious to you what's going to happen – that child will succeed you. But the goals and objectives of the child may not be in harmony with this plan. Alternatively, some children may be overlooked as a successor because their views and general outlook on business issues differs greatly from that of the founder (due to human nature, we often relate better to people who share the same style and values).
In many cases, problems can arise right at the beginning if you do not deal appropriately with two key questions:
1. Are my children interested in succeeding me?
2. Are my children capable of running the business when I retire?
To deal with these questions fully, both communication and objectivity are important. When it comes to communication, have you actually asked your child whether he or she wants to succeed you? And if you have, are you sure he or she was truthful in his or her response (knowing how strongly you feel about the business)? Objectivity in terms of assessing your child’s ability to run the business is also important.