Start the succession conversation now—six strategies that are designed to keep your tradition alive.
I am the CFO for a family-owned business—and I’m not in “the” family. I’m not alone. In this country, family businesses play a huge role in our economy, providing 60 percent of the nation’s jobs. I’ve had the privilege of working for several family businesses throughout my career. These businesses are nimble, entrepreneurial and are actively engaged in their operation. They have a great deal of care and concern for their clients and their employee. While I am not “in” the family, I am treated like I am. There is enormous pride and accomplishment in building a successful family business.
Leading a Legacy
Less than one-third of family businesses transition to the next generation. This is a sad statistic. In 2017 alone, twenty-seven insurance firms in Maryland, Delaware and Virginia sold to either national firms, publicly held firms, or to competitors. Family businesses in a broad range of industries—not just insurance—end up being acquired, sold or even shut down because they haven’t developed a concrete succession plan.
Creating a succession plan isn’t easy. In fact, it’s a ton of work. It requires the previous generation to be open to letting go and the next generation to craft a business plan that is capable of sustaining the operation for the future.
Recently, Deeley Insurance Group’s president, Laura Deeley Bren, joined her father as a partner in the firm after running the operations for more than tenyears. We would like to share what we have learned from our own succession plan experience.
Jumpstart Succession Planning—6 Tips
- Start Yesterday. If you didn’t start the conversation yesterday, begin talking today. All too often, succession is a topic that is kicked down the road because it is difficult work on the business while running the day-to-day operations.
- Get Help. Commit the financial resources to enlist the help of advisors to assist in navigating through the process and hold you accountable to executing the plan.
- Build a Bench. The succession discussion needs to delve deeper than the ownership level. Constantly reassessing your team and reinvesting to deepen your bench of great employees enhances your relationships with your clients. It creates depth when one employee leaves or retires as there will always be others to advise and guide your clients, hopefully cementing your relationship in place long into the future.
- Continue Growing Forward. The business itself has to adapt and evolve to be able to perpetuate. Are you growing? Are you relevant?
- Keep Working the Plan. Once companies establish their succession plans, they should continuously reevaluate the plan, maintaining some element of transparency so that employees have confidence in their future with the company and clients can solidify their trust in you. This open conversation can help define a positive and desirable company culture.
- Take Heart. These discussions can get personal and raw. Whether you are a member of the family or an advisor helping to navigate the discussion, it is important to remember the human element of these conversations. Aligning everyone’s interests is an important component of a successful plan.
The truth is, succession planning can be a challenging and arduous process. If you stay focused and are willing to work hard, the result will be clarity and peace of mind for you and your entire team. We’d be happy to share our experience and the lessons we learned along the way. Feel free to contact me at 410-213-5531 to discuss.
