With regards to Succession Plan Steps, an article by Debaise outline practical steps that can help a business owner identify and emplace a successor.

1) Identify a leader who cares for the company as much as you do

2) Make sure the choice does not negatively effect family relationships

3) Plan a multi family retreat to discuss the need for a successor

4) Allow individual family members to express their desires to lead the company

5) To avoid distractions schedule the retreat away from the office

6) Invite all family members including in-laws

7) Write a job description to reduce emotion form the discussion making process

Outline job requirements in terms of skills, work experience and personality

9) Family members may want to be owners but not managers – Consider non-family CEO (from within the firm of using executive search firm

10) Solicit advice from an outside board of directors, if you have one, or from professionals or consultants familiar with family businesses and succession planning

There are many problems with these steps, thus a suitable basis for discussion -

What do you guys think?

Colleen Debaise - http://online.wsj.com/article/SB10001424052748704795604574519922765421290.html

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Succession is not a single event, but a process that should take place over several years requiring planning, teamwork, and constant re-evaluation.

When considering succession various options exist. These include handing over ownership to offspring or other relatives, passing control to a non-family manager.

Family members

Handing over control to a relative is the most popular choice for family business owners. Many who opt for this route feel happy they are leaving the company in safe hands and confident they will be able to continue to play a part in running it.

But care should be taken when picking a successor as decisions are often made on emotional grounds or to avoid family arguments. While the most obvious person may be the eldest son, for example, he may not be the best choice for the company. It may also be tempting to put different children in charge of different parts of the firm to demonstrate equal treatment. However this can cause problems later on, so aim to pick one main successor.

• Is the choice of successor committed to running the business?
• Does he/she possess the correct leadership and management skills?
• Is he/she capable of progressing the business?
• Is there someone else within the family more qualified and interested in running the company?

Conduct open discussions with your family at work rather than at home. Consider also involving an independent third party such as a business adviser or non-executive director.

Once the choice has been made, the person should be fully prepared for their new role through formal training and mentoring. Allowing the successor to work across different areas of the company is a good way of getting them up to speed about the business operations.

Calculate how much income you will require when you retire and how this will be linked into the future performance of the company. You should also be aware of your tax position and seek the advice of a financial expert on inheritance tax and capital gains tax.

External successor

If no relatives are deemed suitable, or want the role, an alternative person from outside the family must be found. This could be someone who already works for the company, a business adviser, or a complete stranger. The process used when appointing a relative should also be followed when choosing an external successor.

Appointing an external successor can be a contentious issue so all staff members should be made aware of the reasons for the decision and the benefits it will bring to the company. To avoid any conflict or resentment, key employees should be involved in the whole succession process including the training and mentoring.

(http://www.mybusiness.co.uk/Yc7iodBofDymQQ.html)

Another interesting article on the importance of choosing the right successor. This article also emphasizes on how daughters can sometimes be overlooked from family business.

Right Business successors ‘vital’.

“Fewer than one in three family businesses survive to the second generation and less that one in 20 make it to the third,” she said.

Dr Janjuha-Jivraj believes that one of the main reasons for this is that family businesses often choose the wrong heirs to manage them.

“How you choose a successor should be based on pre-determined values, qualifications and experience,” she said.

“Very often businesses choose a successor early on, usually the eldest son, and try to groom that person for the job.

“That works very well in theory, but in reality that person may not be the ideal candidate.”

Dr Janjuha-Jivraj said that daughters are often overlooked and very often the younger children are more skilled.

“Because they don’t grow up expecting to take over the business, they tend to work harder in university and are more ambitious,” she said.

She was speaking at a forum on the Challenges and Experiences of Family Busineses organised by UK-based Women in Business (WIB) in association with the Bahrain Businesswomen’s Society (BBS).

It is being supported by the Arab British Chamber of Commerce, UK Trade and Investment and Bahrain Financial Services Development Bureau.

In a session chaired by Al Hilal Group chairman Anwar Abdulrahman, whose company is a part owner of WIB, Dr Janjuha-Jivraj said that ‘emotion shouldn’t be the dominant factor in running family.’

She gave the example of US retail giant Wal-Mart, of which the founding family still owns 40 per cent, but does not manage. “Wal-Mart started in 1962 and is now worth $200 billion (BD75.6bn),” said Ms Horlick.

Mr Abdulrahman said he was pleased to see women playing a more proactive role in family businesses, adding that their underdog status often makes them more hardworking and serious than their male counterparts.

(Tariq Khonji, Scottish Family Business Association, 29th Apr, 2007)

Possible model for succession

Hi guys, I found a very interesting video on youtube about succession and how to become a CEO in a family firm. The video consider the best ways to become a CEO are by starting a company or joining one in which there is room for movement and growth. Become a CEO with tips from an administrative trainer in this free video on business management and leadership skills.

Expert: Gloria Dixon Campbell
Bio: Gloria Dixon Campbell has an executive MBA in management from the University of South Florida, and a B.A. in Sociology from the University of West Florida.

http://www.youtube.com/watch?v=s2k0By5NM28&feature=player_embedded