We spoke with Antoine Carriere, expert business coach and trainer, to learn the best ways to manage and prepare for succession planning. Antoine shared the types of questions that should be asked, the process of determining reasonable expectations, and also the one part of succession planning that is always forgotten.
Solink: What kind of questions should be asked when starting a succession plan?
Antoine: Succession planning opens the doors to a lot of situations and scenarios that a parent may not have ever thought about before. Many people craft their initial business plan without thinking of how they would eventually exit the business, but it’s important to start coming up with a fool-proof plan as early as possible.
If you happen to have a family member who is interested in taking over the business, you may feel like it’s the easier option, but there are just as many–if not more–potential problems that arise in this scenario. There are many important questions to ask yourself, and the person taking over, as you begin to enter the succession planning process. Such as:
- What exactly do you intend to hand off? Will you be leaving the business entirely, or will you just be stepping back from day-to-day operations? Will you remain a board member or an adviser to the new owner, or will you completely relinquish your control?
- Why are they taking over the business? Are they acting out of a sense of obligation, or are they genuinely excited to take over the business? Do they have ideas and plans for the future of the business, or are they going to be keeping it the way it is to continue their parent’s legacy?
- What are the expectations of each person involved? How much involvement does the new owner want from their child once the business is transferred and vice versa? Do they want to share details of the business, or will it be kept separate from their personal relationship? Does the parent support the changes that the child has in mind?
All of these things must be considered long before the legal documentation begins. Without a solid agreement between the parent and the child, there is a potential to destroy a formally positive relationship.
S: What is the best way to manage an ownership change for your employees and customers?
A: With both employees and customers, the most important factors are communication and confidence with both the original and incoming owner.
With your employees, the current owner must communicate clearly, letting everyone know the intended timeline, planned process, and which responsibilities their child will be taking on in the business. Often, a child will join the business before their parent is retired to “learn the ropes,” and in this time it’s very important that the parent encourages the child and supports their choices.
If the child is doing something that the parent disagrees with, it’s important to discuss this behind closed doors; don’t overrule the child in front of other employees, otherwise, it appears as though there is a lack of trust.
The customers should also be given a heads up before the change in ownership. Introducing the child to some of the star customers is a good start, as it gives them a chance to build their confidence and start to understand the customer’s opinions. Transfer relationships slowly, starting with joint meetings, and allow the child more control over time until the customer is comfortable with them. This will keep the customers happy and prevent the child from getting overwhelmed in maintaining all these new relationships.
S: What do people forget to consider when they start succession planning?
A: People know that they need to contact their lawyers and accountants when they begin their succession plan, but what they always forget to consider is that this process is going to have a huge emotional impact. Owning and operating a business for several years establishes a connection that is hard to put into words. It’s more difficult to let go than a lot of people anticipate; they often believe they are ready for a break, but in reality, watching someone else take control is very difficult.
There are many questions that a person should consider as they start the succession planning process. Start by thinking about how you started your business, or even when you realized you were successful. Ask yourself how you want to be remembered by your customers and employees, and what product was your “signature”. Most importantly, ask yourself if you’re prepared to move on from the business and watch someone else take over. Even if it is your child stepping in, it can still be challenging to watch them change all of the things you worked so hard to establish.
There can also be an emotional toll on the child as well. Chances are, they watched their parent pour their heart and soul into this business for several years, and it can feel like a lot of pressure to step into those shoes. It’s important to begin discussions early and consider the pros and cons of all of the potential options. It’s a big choice, and it should be treated as such.