Are You a Leader Without Followers?
As a family business owner nears retirement, the legacy he or she will pass on to the next generation comes into focus. What will your legacy be? What will you leave behind (aside from money)? How will you be remembered in your business and your community? We all want to leave our mark, especially when we have spent a lifetime building something. But the reality is that passing on your legacy can be difficult. Though many business owners assume that legacy is automatic, the expectations you have may not be shared by the next generation. Your legacy is more than the business you built or the impact you’ve made. It’s the continuation of your business’ culture, mission and values. And while what you have built reflects these, there’s no guarantee the next generation will run your business is the manner that you see fit. While it is important to share your thoughts and intentions with your successor, you must be prepared for the possibility that your children may not want to follow in your exact footsteps. Your children, even if they are currently working with you, may have a different lens for what the future of the business holds. A critical question to ask yourself is “How much variation from your vision and business model can you tolerate? And, what if you have created a future path for your business that your kids don’t want to follow?
The best way to reduce potential conflict is to ask relevant questions prior to initiating a formal transition process of your business to your children. This will help you understand your own beliefs and concerns you about the transition of your business.
Five Critical Questions to Ask Yourself
- Do you believe your kids have a passion for your business and truly want to take over, or are they agreeing to be your successor out of a sense of obligation?
- Have you done some soul searching and to determine if you really respect your adult children and are willing to let go of control of the business to them?
- Have you discussed, with your kids, everyone’s expectations of the transition—including timing, price, terms, future roles, limits of authority?
- Have you thought about what role you would like to play in the business during the transition process and beyond?
- Are you willing to be an advisor and a “safety net” for your adult children and not say “I told you so” when they inevitably make a mistake?
Seeking first to understand how you feel about these issues will help you devise a plan to ensure that your legacy lives on long after you retire. The next step is putting it in writing.
Creating a Leadership Transition Document
When it comes to communication between generations, much gets lost in translation. That’s why putting together a leadership transition document is essential to your business—and to your legacy. This document should reflect your history, values, and the lessons learned in your role, including the nuances of your role and implications in the industry and vision for the future of your company. Here’s how to do it:
Write your history
The history of your business and how you built it are the cornerstones of your legacy. By laying out this history, you’ll preserve its importance and give the next generation a starting point to continue on in the way that you would have wanted. Make sure that this history explains how you built a successful business—and why it matters.
Identify Critical Issues to be Addressed
Every business must adapt to new circumstances. If you transition leadership of your business without direction, outside forces could damage or destroy what you have built. Lay out the hot-button issues that need to be addressed post-transition and offer solutions on how to solve those issues.
Share Your Vision
You have a vision for the future of your business. Your next of kin probably does as well—but a different vision than yours. Share, in detail, your mission, vision and values—and why you think adhering to them is the best way forward.
Outline Specific Expectations
Communicating your expectations is the best way to ensure that your legacy will survive. Writing them down will provide clarity, so nothing gets lost and so that the next generation can have a clear guide for their actions. This is where you can detail how to realize your mission and vision—and how your values play a part in them. During this conversation, allow your successor to share their vision as well. The goal is to create a collaborative document that honors the past, while being agile in the approach to the future.
Creating a transition document is the greatest gift you can give to the next generation. The return on your investment will be immeasurable—and it may just cement your legacy. By understanding the concept of legacy and embracing the powerful role that sharing your mission, vision and values with the next generation can play in the transition process, you have the opportunity to significantly impact the future of your family and loved ones, as well as the successful succession of your business.
Schedule a consultation with FPMG today to create a legacy transition plan that meets the needs of your business.