Why a conversation about succession planning doesn’t have to mean the end of your career
Last month, the Family Business Central team was out on the road to meet with farming families and family businesses to gain insights into the business landscape in rural and regional areas. One of the big issues which consistently came up was succession in family business—which is often the conversation that worries so many families.
Out in the communities of Queensland’s stunning Darling Downs, we were thrilled to meet so many local family and rural businesses. There’s so much to be gained by getting out and talking to people face to face. And it’s surprising what comes up.
A recurring theme for many of the conversations we had on the road trip was the challenge of talking about succession. Across the generations, people are reluctant to bring up the topic of succession in family business. And it’s not just in regional areas, this sentiment is echoed in businesses we talk to throughout Australia and New Zealand. When it comes to future planning for family businesses, it seems that in many cases, succession is the elephant in the room.
Why are people reluctant to talk about family business succession planning?
At one of our workshops, the topic of succession planning came up. I had my ideas on why family members find it hard to talk about succession, but I was curious to hear what those in the room thought. This was the perfect opportunity to gain insights on the issue. One couple suggested that succession is a tough conversation because the senior generation feels they’ll have nothing to do. A few heads nodded in agreement around the room. Suddenly, a member of the senior generation called out, “Don’t put me out to pasture!”.
And there it is. The reason succession is such a tricky subject summed up perfectly by someone facing the situation themselves right now.
This may be a simplified way of explaining it, but it certainly sums up the sentiment felt by those who find themselves moving closer to stepping down but not knowing what lies on the other side of that move.
Recognising the past before we face the future
The senior generation of any family business is the one that has been hard at work for years. Whether it’s on the family farm or running the family business, whether it is a business they started or one they inherited, there’s no question they have worked hard and sacrificed a lot. And now they have something which provides benefits for current family members and generations to come. They certainly deserve respect for that.
Whatever the circumstance of the family business or farm, they have likely seen it grow into something much bigger than it was when they started and shaped it exactly the way they wanted it to be. It’s easy to see how their identity, their very reason for being, is tied up in the business. This is not something that is easy to walk away from.
The business has been their entire life. You can understand why they might feel hesitant, even fearful, about what might happen.
The role of the current generation of the family business is to help remove this fear or uncertainty for the senior generation. And the best way to do this is (like most things in life) communication. Start talking about that thing you’ve avoided talking about for so long—how do we want to pass this business on.
The importance of succession planning in family-owned business
In my experience working with family businesses of all sizes, I find the senior generations can be reluctant to talk with the current generation. This may be because they are worried it will upset family members or end with them being “put out to pasture”.
But the head-in-sand approach is really not the best approach in this case.
If you miss the opportunity to have the succession conversation, you risk things becoming much worse—for the business and the family. As the senior generation of a family business, you have an innate understanding of the business and a vision for the future. There is a lot of work that has gone into getting things to that point, and if there is no plan to hand over this information and get the next generation ready, the future of the business is at risk. I have seen it all ‘go up in smoke’ when these conversations were not had.
Another aspect that is often forgotten is preparing the legal side of things. Unfortunately, we see this oversight happen a lot in our consultancy work with family businesses. If things are not set up from a legal and governance side of things, it can be frustrating and potentially damaging for the business and the working relationship between family members.
When to start talking about succession planning
The reality is that the best time for senior family members to start talking about succession is right now. As they head towards retirement age, they should be focusing on doing the things they want to do and getting rid of the things they don’t want to do.
This doesn’t have to mean walking away. It may just mean they can hand over some aspects of the business to others and keep the good stuff for themselves. This is a smart way to manage succession as it gives the next generation the chance to learn and be mentored. They can then confidently step into a leadership role when the time comes.
The key things to remember are communication and planning. As long as you have a plan, nothing may actually change for a while—succession is a planned transition, not a date stamp. Having the conversation simply means everyone is clear on what everyone else is thinking and knows the plan. As humans, we often lean towards the worst-case scenarios, but what we think and what is actually happening can be two completely different things! You can avoid a lot of grief, stress and aggravation when everyone knows what is happening,
Time to do what you love
Here is a story we like to tell, which beautifully illustrates succession planning done well.
A senior member of a family business was heading towards retirement and no longer wanted to manage running the entire business himself. He didn’t want to stop working entirely because it was all he had ever done. So, he spoke with his family, and they worked out an arrangement where he would come into work two days a week and could keep his office.
He no longer had to deal with the pressure of being the boss, deal with staff, customers or the bank. When I met him, he informed me that he was six weeks off his 100th birthday! His joy and reason for being were connected to the business. He wanted to stay involved but didn’t need or want the stress. He was delighted that his son took all the responsibility and workload, he was left to do what he wanted in the business, and in his spare time, get up to whatever wild and crazy things a spritely 100-year-old does. Everyone in the business got what they wanted, and the grandfather felt confident about what was going to happen to his hard-fought business when he passed on.
Time to start succession planning
For those involved in family businesses or farms, we understand this is a complex issue involving the big emotions. Not to mention careers, money and legacy. Rest assured your family is not plotting to kick you out They want you to relax and enjoy yourself. They know you’ve earned it.
Here’s a great way to start the process of successions planning:
- Things you love. Write a list of all things connected to the business and your family that you love to do.
- Things you don’t love. Write a list of all the things connected to the business and your family you really dislike.
The first list is yours. The second list is to delegate to the upcoming generation.
There will always be doubts and niggles that the next generation may not do things the way you have always done it, or they’ll make mistakes—and they probably will. But you were probably the same when you started. Everyone learns from mistakes, and everything will work out.
My final word would be you must have the conversation. Talk to your family and find out what they want, and then tell them what you want. When it’s all out in the open, there will be a collective sigh of relief as family members feel more secure with what the future holds.
This is the time for you to relax and do the things you enjoy. And if that’s getting up at 3 am to help the odd ewe with a lamb, meeting with key customers or looking for new investments, then that’s fine! Just make sure you let the young ones know you want to do it.
Need help with the succession conversation? As family business consultants, we can help you navigate succession planning for your family business without the stress. Get in touch today.