family business succession planning issues

• Awards Season
• Big Stories
• Pop Culture
• Video Games
• Celebrities

How to Plan a Successful Family Naturalist Picture-taking Adventure

If you’re looking for a fun and educational activity to do with your family, consider going on a naturalist picture-taking adventure. Not only will you get to spend quality time together in nature, but you’ll also capture some amazing photos of the flora and fauna around you. In this article, we’ll give you some tips on how to plan a successful family naturalist picture-taking adventure.

Choosing Your Location

The first step in planning your family naturalist picture-taking adventure is choosing the right location. Look for places that are known for their biodiversity such as national parks, wildlife preserves, or botanical gardens. You can also do some research online or ask local experts for recommendations.

Once you’ve chosen your location, research the best times of day to visit and any specific areas where you’re likely to find interesting subjects for your photos. Make sure everyone in your group is aware of any safety precautions or rules that need to be followed while visiting the area.

Gear Up for Success

To make sure you’re prepared for your naturalist picture-taking adventure, it’s important to have the right gear. You’ll want to bring a camera (or phones with high-quality cameras) with plenty of storage space and batteries fully charged. A tripod can also be helpful in stabilizing shots and ensuring sharpness.

Consider purchasing field guides or downloading apps that will help identify plants and animals in the area. Binoculars can also come in handy when trying to spot wildlife from afar.

It’s also important to dress appropriately for the weather conditions and terrain of your chosen location. Wear comfortable shoes with good traction and bring sunscreen, insect repellent, and plenty of water.

Capture Your Shots

When taking pictures on your naturalist adventure, remember that patience is key. Take time observing your environment before snapping shots; watch how light and shadows play with your subjects and try to capture their natural behaviors without disturbing them.

Don’t be afraid to experiment with different angles and compositions. Try shooting from ground-level or bird’s-eye view, or focus on small details like the texture of tree bark or the symmetry of a flower.

Share Your Experience

After your family naturalist picture-taking adventure, take some time to review your photos together. Talk about what you saw and learned during your trip. Share your favorite shots with friends and family, or consider submitting them to online nature photography communities.

Not only will you have some amazing pictures to remember your adventure by, but you’ll also have created memories that will last a lifetime.

This text was generated using a large language model, and select text has been reviewed and moderated for purposes such as readability.

MORE FROM ASK.COM

• Our purpose and values
• Our global presence

Corporate services

• Capital markets
• Institutional
• Private client services
• Family office services
• Insights and guides
• Hawksford careers
• People development
• Career opportunities
• Life at Hawksford

About Hawksford

We are an international provider of Corporate, Private Client and Fund services.   We ’ re committed to making every interaction meaningful and productive , and deliver ing solutions that are tailored specifically to you .  

• Collaborative

Learn about Hawksford

• Become a client

Featured resources

Autumn budget 2023 update

UK’s focus on innovation pivotal in supporting global business growth

Hawksford to acquire Cayman and US-based firm Paradigm Governance Partners

The core principles of good corporate governance

Roles and responsibilities of a company shareholder

Five qualities that make a successful chairperson

• Netherlands
• New Zealand

Whether you’re a multinational corporation, a family-owned company, a growth or early-stage business, an entrepreneur, high-net-worth individual or intermediary, our wide range of corporate services can deliver the solutions you need.

Our services

• Entity formation and administration
• Account opening and cash management
• Director services
• Company secretarial
• Transaction management
• HR and payroll
• Office services

Unlocking success: the UK for tech startups

Private Client

Our Private Client team has one goal – to provide solutions that will protect and grow your wealth now and for generations to come. From supporting individuals and family businesses through to full family office services, we work closely with you and your advisers to ensure your ambitions become a reality.

• Private Client services
• Trust, company and foundation services 
• Private trust companies 
• Philanthropy
• Real estate
• Managing lifestyle and luxury assets 
• Wills and probate services
• Accounting, tax compliance and regulatory reporting
• Family office solutions 

Hawksford strengthens Private Client team

The lure of Singapore: An attractive destination for single family offices

Five reasons why you should set up a family office in Jersey

How to overcome succession planning challenges in family-owned businesses

Singapore: the perfect home for single family offices

Wealthy families must adapt to meet emerging economic challenges

• Fund services

Our flexible fund administration services provide invaluable support, whatever your needs. Experts in alternative asset classes and fund structures, we take a hands-on approach in the day-to-day running of your fund, freeing you up to focus on your investments.

• Onboarding and establishment
• Company secretarial services
• Fund accounting services
• Financial reporting
• Investor services
• Banking solutions
• Tax reporting
• Fund compliance services

Hawksford appoints new Director of Fund Services

The future of funds: Opportunities and challenges in the African market

The new philanthropy lifecycle

Venture capital: Trends, implications and crystal balls

Alternative managers increasingly choosing Jersey to support EU capital raising

Jersey Private Funds on the Rise

Hawksford is an international provider of Corporate, Private Client and Fund services. We enable our clients to realise potential and maximise opportunities. We deliver value for our clients by anticipating their needs and thinking beyond tomorrow.

Topics and themes

• International expansion
• Tax, accounting and reporting
• Family office
• Succession planning
• Private equity

Careers at Hawksford

We recruit for attitude and train for the skills we require. We understand the importance of investing in our people to help them to fulfill their ambitions. #WeAreHawksford

• 1 No Hierarchy
• 4 Respect everyone
• 5 Be flexible

Build your career with us

Featured opportunities

Senior Administrator

Fund Administrator

Junior IT Analyst

Assistant Manager, CSS

06 April 2023 |

Share this post

Handing over the running of a family business to the next generation can be a difficult process. However, understanding the common challenges and putting plans in place can help ease the transition.

Anyone familiar with the award-winning TV show ‘Succession’ will have seen the Roy family tearing each other apart for control of their entertainment and media conglomerate. Admittedly, this is an extreme version of what happens when it comes to business succession within families.

Yet, while statistics show that family enterprise is the most common form of business ownership in the world, many families find working in such a unique and personal environment quite challenging. This is particularly true when it comes to preparing the next generation to assume control of – or take a larger role in – the family business.

Thankfully, giving consideration to some of the issues that might arise around family business succession planning means that steps can be put into place to make the process as smooth as possible. Here are four common challenges of business succession planning and how they can be overcome.

1. Disparate family goals

As families grow and the wider world changes, the goals and values of family members often evolve and become far more diverse. One family member may want to build the business for future generations, one may want to take the business in a totally new direction, while others may simply want to harvest the existing equity.

Cousins who grew up in different households will usually share some values while being very different in other respects, while even within the same family, siblings can have varied aspirations. Managing these different goals and values, and ensuring that everyone is listened to, can be a significant challenge.

2. Resistance to change

What made the business successful in the past can sometimes get in the way of its future. By nature, successful business leaders tend to be remarkably driven and committed to their ideas, which may make them inflexible and resistant to change.

As much as family goals may change, so the patriarch or matriarch needs to be open to new ideas from the next generation. They may well, for instance, have a better grip on current trends and the use of technology, as well as different working styles from their predecessors.

3. Lack of preparation for next-generation leadership

Succession requires long-term planning, yet it isn’t uncommon for the next generation to be wholly unprepared to take on the running of the business. This could be because the founder is clinging to control, or that younger family members haven't been given the opportunity to develop the necessary skills.

While leadership most definitely requires a particular skillset, it's also essential that family members are given space to explore their own leadership style. A lack of preparation can ultimately mean there is no appropriate heir or successor to take the reins.

4. Conflict among siblings/successors

Differences of opinion are common when it comes to running a business – but add in a family dynamic and things can become far more complicated. On a basic level, siblings can often have very different personalities, but then factor in different values, goals and objectives and conflicts can easily arise.

In order to stop any such conflicts escalating and becoming personal, founders really need to be tuned in to the relationships between family members.

While there is no one secret formula to successively navigating succession in a family business, there are best practices that help families deal with issues both before and after they arise. This involves looking at succession through both a business and a family lens.

Planning at board level

Succession planning in any company – whether family-owned or not – is critical to ensuring continuity when CEOs and owners decide to move on or step down. For owner-managed businesses, such planning is arguably more important in order to ensure that family roles are clearly established.

While founders may be tempted to leave succession until they finally decide to retire, illness or death could throw a business into turmoil if no plans are in place. Therefore, it makes sense for the board – which will likely contain non-family members – to have ratified a way forward so that the business moves ahead with as little disruption as possible.

Planning at family level

It’s vital that family members across the generations reach an agreement about post-succession roles and how the business will move forward. Dependent on the family dynamic, this could be relatively straightforward or massively problematic.

A family council can play a key role here as it allows members to meet regularly and address their needs and any changes – both personal and in business. Similarly, unity can be achieved through the establishment of a constitution where the family’s principles are agreed. This can be as far-reaching as required.

Using external partners and advisers

Where conflict arises, families should consider the use of advisers who can look at any issues independently and with a clear eye. This could be in helping mediate between family members, establishing any personal wealth or business structures, or advising on legal matters.

Such third-parties can play a very distinct role in helping make sure that any conflicts are dealt with and that succession proceeds in the most optimal (and painless) way possible.

Disclaimer: This article is intended for general information only and is not intended to apply to any specific situations or to constitute legal advice.   

To discuss your succession planning requirements

Talk to us today

Subscribe to insights and guides

Most recent articles.

UK’s focus on innovation...

Hawksford to acquire Cayman and...

eBook: Doing business in Asia

This eBook provides an overview of what you need to know when considering doing business in Asia. It includes the fundamentals of investing, from setting up a company in particular jurisdictions to successfully running a business.

• COMMUNITY INVOLVEMENT
• CCHA for ALL
• ART IN THE OFFICE
• CCHA COLLEGIATE
• OUR PRACTICES

Common Challenges with Family Business Succession Planning

Author: Victoria L. Howard

Post date: 8.21.23.

Family business succession planning involves transitioning leadership and ownership of a family-owned business from generation to generation. For some families, the transition between successor and predecessor goes smoothly. In other situations, founders need help to keep the next generation of their family focused on their same business goals. In fact, nearly a quarter of family business owners surveyed think their successors are unqualified or unwilling to take over their company.

Succession planning is essential to ensure the business’s long-term viability, and families often face several common challenges during this process. In this post, the Church Church Hittle and Antrim team will also explain some of the biggest challenges for family businesses in transition. We will also provide some best practices to give you a head start in managing your succession plan.

Overcoming Emotional and Social Challenges in a Family Business Transition

One of the biggest challenges family businesses in transition face is overcoming the emotional issues brewing within the family, outside of the business. Emotional attachments to the company, sibling rivalries, and differing opinions on leadership roles can complicate decision-making. Below are some ways those emotional and social dynamics can impact a succession plan.

Lack of Communication Between Generations

Effective communication is critical, but discussing retirement, ownership shares, and leadership roles can be sensitive and difficult to address openly within the family. For founders, it can be hard to consider their mortality. No one wants to discuss how their family and business will continue without them.

These discussions can bring up emotions concerning life, death, and control. Having an attorney help your family-run business create a transition plan can take the emotional heat out of the room and help founders discuss what comes next without feeling left out of the conversation.

Founders may also be aware that while more than 80% of the world’s businesses are family-run, less than 15% are handed down past the second generation. Instead of confronting realities like this head-on, some founders may prefer to let the next generation sort it out.

Lack of Clarity in Successor Selection

Another challenge family businesses face is choosing the right person to succeed the founder. Family members may have differing interests, capabilities, or commitment levels when it comes to the business. Striking a balance between family needs and the business’s best interests is essential for maintaining the company’s success and avoiding conflicts.

Lack of any Successor Planning

Family businesses can benefit from having a well-executed succession plan in place. This could be in the form of a Will, Trust, or buy-sell agreement. Having a plan in place can take the burden off future generations and allow for structured decision making.

Operational Challenges in Family Business Succession Planning

When succession planning, families face challenges that are both emotional and operational. How will the successor get the proper training? Who will provide the tools for them to succeed? Some of the most common operational challenges families face in family business succession planning include the following:

Training and preparing the successor to lead;

Managing tax and estate issues to maximize the benefit to both the business and the retiring founder or their estate;

Allocating appropriate financial resources for both active and non-active family members;

Confronting resistance from both family members and employees to change operations within the organization; and

Creating effective legal and governance structures, such as family councils or boards.

Founders and successors should be mindful of the financial responsibilities of a family business transition. Mismanaged tax issues or failure to account for a distribution to a retired or inactive family member can be costly if not properly planned for.

Best Practices for a Smooth Family Business Transition

Addressing the challenges of transitioning a family business to the next generation requires effort and time. You must plan carefully and use any tools your lawyer believes would be beneficial in helping your family transition smoothly.

These tools are essential to consider when thinking about how to structure or manage your business going forward. For instance, many family businesses are structured as sole proprietorships, where there is little separation between the owner and the company. When there is no way to distinguish between the founder and the business, succession planning can become considerably more complicated. By considering long-term solutions, like incorporating your business or forming a limited partnership or limited liability company, you can create a smoother path and clear instructions for passing down your company.

Finally, you should consider the possibility of incapacity, disability, divorce, or simply deciding to end your involvement in the company when making a succession plan. By considering a variety of succession scenarios and planning for the long term, you may be able to enjoy your retirement while happily observing your successors take over.

How CCHA Law Can Help

At CCHA Law, our team of business and estate lawyers has helped Indiana family businesses succeed for over 140 years. To schedule a consultation with an estate planning lawyer , call 317-773-2190 today. You can also connect with us through our online contact form .

Recent Blog Posts

Ccha honored with advancing noblesville award, the mediation process for divorce: what it is and why it’s important.

Emily J. Schmale

Defined benefit vs. defined contribution pension plans.

• Executive Search Solutions
• Executive Interim Solutions
• Leadership Advisory
• Recruitment Process Outsourcing
• Talent Mapping Solutions
• Board Solutions
• Our Locations
• Values and Mission
• Corporate & Social Responsibility
• Diversity and Inclusion
• Join Our Team
• Life Sciences
• Digitization & Technology
• Financial Services

Set your location

SpenglerFox works around the globe. Set your location to ensure you see the right content information for your country.

Countries are listed for each SpenglerFox office. If you do not see your country, it will default to 'Global'

Your current location

• South Africa
• United Arab Emirates
• United States of America

Asia Pacific

• South Korea
• Czech Republic
• Isle of Man
• Netherlands
• Switzerland
• United Kingdom

Middle East

• Saudi Arabia

Newsletter sign up

Your browser does not support iframes.

Navigating the Pitfalls of Family Business Succession Planning

Share this artcile:.

Family-owned businesses hold a unique charm, driven by a shared vision, heritage, and a deep sense of legacy. However, one of the most critical challenges they face is ensuring a successful transition of leadership and ownership from one generation to the next . Regrettably, many family businesses struggle to survive once the original founders retire. In this article, we will delve into the five main causes behind this trend and explore potential solutions to help family-owned businesses implement effective succession planning.

Cause #1: Lack of Communication and Planning:

One of the primary pitfalls of family business succession planning is the failure to establish clear lines of communication and a comprehensive succession plan. The lack of open dialogue among family members can lead to misunderstandings, conflicts, and an absence of consensus on the future direction of the business.

Solution: Initiate early and frequent conversations, involving all relevant stakeholders, to discuss succession goals, expectations, and roles. Seek professional guidance to develop a well-defined succession plan that addresses both business and family dynamics.

Cause #2: Absence of Competence-based Selection :

In some cases, family businesses prioritize nepotism or tradition over competence when selecting the next leader. This can result in an ill-prepared successor who lacks the necessary skills and qualifications to drive the business forward.

Solution: Implement a merit-based selection process that focuses on the individual’s qualifications, experience, and commitment to the business. Conduct a thorough assessment of potential successors, including external candidates, to ensure the best fit for the company’s long-term success.

Cause #3: Inadequate Succession Training and Development:

Insufficient investment in training and development programs for the next generation is another common pitfall. Without proper preparation, successors may struggle to adapt to their new roles and responsibilities, leading to a decline in performance and overall business sustainability.

Solution: Establish a structured training and mentorship program that combines on-the-job experience, external education, and guidance from experienced family members or industry professionals. This approach allows for a smooth transition and cultivates the necessary skills and knowledge for future leaders.

Cause #4: Family Conflict and Rivalries:

Family dynamics can create complex relationships and power struggles, which often escalate during the succession planning process. Unresolved conflicts, rivalries, and a lack of trust can undermine the unity necessary for successful succession.

Solution: Establish a family governance structure that includes clear decision-making processes and conflict resolution mechanisms. Encourage open communication, active listening, and the creation of shared values and objectives that prioritize the long-term sustainability of the business.

Cause #5: Inadequate External Perspectives:

Family-owned businesses may become insular, relying solely on internal insights and perspectives. This can limit innovation, hinder adaptation to changing market dynamics, and lead to stagnation. Solution: Embrace external perspectives by inviting independent advisors, industry experts, and non-family board members to provide fresh insights and challenge existing paradigms. Their expertise can help the business remain competitive and identify new opportunities for growth.

Conclusion:

Succession planning is a critical phase in the life cycle of family-owned businesses, and navigating its pitfalls is crucial for long-term sustainability. By addressing the lack of communication, prioritizing competence-based selection, investing in succession training and development, managing family conflicts, and embracing external perspectives, family-owned businesses can enhance their chances of a successful transition. Effective succession planning ensures that the values, legacy, and entrepreneurial spirit of the original founders continue to thrive, enabling future generations to carry the torch forward and secure a prosperous future for the business.

To read more about us and our range of premium human capital solutions, please visit our website or get in touch . Do not forget to follow us on our social media channels.

You may also like:

Why companies are increasingly turning to interim managers to lead key transformation projects, enhancing ceo succession planning: a call for board members’ awareness and action, unlocking talent: the power of assessment centres in a transforming business landscape.

• Business Growth
• Family Business & Succession
• Not-for-Profit Growth
• The Business Growth Programme
• Essential Management
• Sales Essentials
• Finance Fundamentals
• Masterclass: Selling Your Business
• Another Item
• Sub-menu Item 2
• Yet Another Item
• Menu Item 3
• Menu Item 4

Quick links

Hit enter to seach.

3 Common Issues you Must Consider for Family Business Succession

In the UK, two-thirds of all private sector firms are family businesses, contributing over half of GDP and around 40% of private sector employment.

Most family businesses will want to pass the business on to the next generation but relatively few actually do so – fewer than half of family businesses pass to the second generation, and only a fraction to the third..

Without formal succession planning, family-owned businesses run the risk of not being sustainable. Some owners regard succession planning as simply a question of informally handing over the business from one generation to the next. They do not want to plan or think about their withdrawal from the business. This reluctance typically arises from a strong sense of attachment to the business; an aversion to letting go of control and power; fear of retirement; and also the inability to make succession choices between their children. Financial factors often also play a part.

If there is not an adequate successor selection process in place, a business can either cease to exist or fail to realise its true potential. Those families who do successfully pass their business on stand a good chance of seeing their business go from strength to strength.

The key issues family businesses need to consider when succession planning are:

1. Plan for the business and plan for the family:

Succession is a process, rather than a one-off event of handing over the baton. Families that understand this consider it a multi-stage process that happens over years, beginning long before the time when the heirs step up to their new roles. The planning for that process will encompass not just the roles of the next generation in the business prior to succeeding but the preparation of the business for the succession. It will also cover the role of any non-family management in the process; changes to shareholding structures; board membership and management; decision-making processes and impact on the family. All too often succession planning focuses just on technical issues – financial, tax and legal aspects – whereas the bigger challenges of the human dimensions are often completely neglected because everyone wants to avoid the ‘zone of uncomfortable debate’.

In multi-generational family businesses that continue to flourish, these families share common goals concerning both the business and the family. For example, they have mechanisms to resolve conflict and deal with emergencies and continuously build trust among family shareholders who are outside the business. There must be a clear vision of the relationship between the family members and the business, which may well evolve over time along with clearly articulated values.

2. Prepare the next generation:

When succession is managed smoothly, the next generation is prepared not just through the right education and development but often through gaining their early experience elsewhere. When they do then join the family business, they arrive as managers in their own right, with skills and experience, and are not viewed as the ‘kids with silver spoons in their mouths’.  In a growing number of cases where a family business has philanthropic interests, the next generation will take responsibility for managing charitable or social enterprise projects as a means of cutting their teeth prior to entry into the main business. It is also common for the next generation to take a director role in the business at the same time as the senior generation steps back into non-executive roles.  This means they can offer advice and guidance when asked while giving the incoming generation the room to breathe and put their own stamp on the business.

3. Hire from outside the family:

It is a fortunate but very unusual family that has a gene pool capable of supplying all the ability necessary to take the business into the second, third, fourth generation and beyond. Non-family members from board appointments downwards will be attracted to a business where achievement and performance are justly rewarded. Many family businesses treat inter-generational transition as an opportunity to reassess the governance structures they have in place and recognise that employing more non-family involvement can be a step forward. Both outside advisors and board members often bring a detachment and clarity to decision-making that is inherently difficult for those family members who are often too emotionally attached.

It is never too early for a family business to start planning for succession. The perception that succession is a brief episode occurring over a short time is almost certainly a significant barrier to getting it right.

Many thanks to Dr Steffi Hussels, Senior Lecturer in Entrepreneurship, and David Molian, Past BGP Programme Director, Cranfield School of Management for this blog content.

Subscribe for content updates

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

Plan a Smooth Succession for Your Family Business

• Amy Castoro
• Fred Krawchuk

Research shows that 25% of failed transitions are the result of an unprepared heir.

A central concern of family business leaders is assessing the readiness of the next generation to take over the business. This is critical, because research shows that 25% of failed transitions occur due to a lack of a prepared heir. Taking time to co-design what readiness looks like enables both parties to align and have confidence in their ability to step into leadership roles. Families must bolster the participation of the next generation by giving them more autonomy, embedding high-trust behaviors, and adhering to clear standards of readiness. When done effectively, succession plans provide a pathway for future stability and ease the transition of next generation leaders. Engaging the next generation in business transition planning promotes greater alignment, collaboration, and perhaps most importantly, trust in each other and a shared vision for the future.

In many family businesses, the tension between the eagerness of the next generation’s leaders to take control, and the founding generation’s willingness to relinquish control , is the source of many failed relationships and companies. The founder does not trust the next generation to take on the responsibilities of the business, and the next generation does not sense the empowerment to do so. So, they find themselves at an expensive impasse with family harmony and the future of the business at risk. A lack of a co-designed transition plan can create havoc for a family business when, for example, a founder suddenly suffers a medical limitation that impairs their ability to function optimally, or the next generation throws in the towel because they don’t feel included in the future growth of the business. Based on our research of more than 2,500 families and our collective experience as family business consultants, we’ve found that the following strategies can help family businesses best manage the transition to the next generation.

• AC Amy Castoro is president and CEO of The Williams Group, a family coaching and consulting firm, and co-author of Bridging Generations: Transitioning Family Wealth and Values for a Sustainable Legacy . Amy advises ultra-high net worth families how to build trust, navigate the challenges of inter-generational wealth transition, manage conflict, design governance strategies, and build sustainable succession plans. Amy is a graduate of Adelphi University, Strozzi Institute, and has trained extensively with Dr. Fernando Flores.
• FK Fred is a senior family coach and management consultant with The Williams Group. A former U.S. Army Special Forces Colonel and U.S. Department of State Fellow, today Fred draws on his thirty years of experience in over thirty countries to provide relevant expertise to families to improve their strategic thinking, strengthen results through collaboration, and develop resilient ventures that will thrive in today’s fast-paced global environment. Fred is a graduate of the United States Military Academy, Harvard University, and IESE Business School.

Partner Center

Accept the updated privacy & cookie policy

We use cookies and other tracking technologies to provide services in line with the preferences you reveal while browsing the Website to show personalize content and targeted ads, analyze site traffic, and understand where our audience is coming from in order to improve your browsing experience on our Website. By continuing to browse this Website, you consent to the use of these cookies. If you wish to object such processing, please read the instructions described in our Cookie Policy / Privacy Policy .

Interested in blogging for timesofindia.com? We will be happy to have you on board as a blogger, if you have the knack for writing. Just drop in a mail at [email protected] with a brief bio and we will get in touch with you.

Please note:

• TOI will have complete discretion to select bloggers
• TOI's decision in this regard will be final
• There's no remuneration for blogging
• TOI reserves the right to edit all blogs

• Times Evoke
• Entertainment
• Spirituality
• Environment
• Foreign Media

Follow us on

The importance of succession planning in family business.

Anshul Agrawal

Director, Mysore Deep Perfumery House & Zed Black

Family Businesses are the backbone of the Indian Economy, contributing over 75% to India’s GDP. While great opportunities lie ahead for Family Business of India as our country is growing at an unprecedented rate there are also challenges in the survival of family business. Various reasons which lead to survival issues in family business are financial mismanagement, family conflicts & disagreements, external factors like government policies or competition, leadership issues and so on. One of the major reasons a lot of family businesses are not able to survive is Succession Planning.

What is Succession planning?

Succession planning is the process of identifying and developing successors to key positions in a business to take over the business from the current owners. It ensures continuity of the business, helps to avoid conflict within the family and helps in preserving the family’s legacy. 

Why is it needed?

Now let’s understand the reasons for succession planning in detail –

• Business Continuity: Succession planning brings change in culture and management from one generation to the next. It ensures that the business continues to operate effectively by preventing interruptions or conflicts that may occur during a leadership change.
• Preserving Family Values ​​and Traditions: Many Indian family businesses are influenced by their own culture, traditions and family values. Succession planning helps preserve these important elements as the business passes from generation to generation. It enables the next generation to understand and carry on the family tradition and history.
• Retention of business knowledge and skills: Family businesses often have specific business knowledge and skills acquired over many years. Planning is done to help pass this knowledge on to the next generation to ensure that key insights, technologies and ideas are preserved and used for success.
• Family conflict resolution: Lack of proper succession planning can lead to family conflicts, especially when there are many family members who want to do business. By having clear and transparent goals, the possibility of disagreement and conflict is minimized. It sets expectations and provides a basis for decision making, reducing the risk of family conflict.
• Build Trust: Successful planning builds trust and trust among stakeholders, including family members, customers, suppliers and investors. With a clear plan in place, it instills a reassuring sense of stability and clarity regarding the future direction of the business. This trust and confidence is necessary to maintain business relationships and attract outside support.  Lenders are more likely to lend money to a business that has a clear succession plan in place.
• Expertise and Compliance: Supports business performance through Succession Planning, best practices, business management, and performance management. It also provides an understanding of new thoughts, ideas and skills from the next generation. The ability to adapt and accept change is crucial to the long-term growth and sustainability of a family business.
• Employee Morale – Success planning results in increased employee morale and productivity. When employees know that there is a plan for the future of the business, they are more likely to be motivated and productive.
• Reduced risk of financial loss – A well-thought-out succession plan can help to reduce the risk of financial loss in the event of an unexpected event, such as the death or illness of a key owner or manager.

How to do Succession Planning?

There are a number of steps involved in succession planning for family businesses. The first step is to identify potential successors. This can be done by considering family members, employees, or outside candidates. Once potential successors have been identified, they need to be evaluated to determine their skills, experience, and potential. The next step is to develop a plan for training and development. This will help to ensure that the successors have the skills and knowledge they need to be successful. Finally, the succession plan needs to be communicated to the family and the employees. This will help to ensure that everyone is on board with the plan and that there are no surprises when the time comes for the current owners to step down.

If you are a family business owner, it is important to start thinking about succession planning now. A business that is well-positioned for succession is more likely to be successful in the long run. The sooner you start, the more time you will have to develop a comprehensive plan that meets the needs of your business and your family. It helps ensure the long-term success of the business and facilitates the transition from one generation to the next, while preserving the family’s identity and history.

Top Comment

{{{short}}} {{#more}} {{{long}}} ... Read More {{/more}}

Start a Conversation

Views expressed above are the author's own.

END OF ARTICLE

Story, not history: NCERT must not include myths in history syllabi; myths have helped us endure; history divides us

• Why do Nepal, Bangladesh beat India in social indicators? Starts with caste

Halting Hasina: India should worry about Bangla PM’s authoritarian streak. It will hurt her interests as well as New Delhi’s

IndiNoGo Flight: Why eight deboarded passengers at Bengaluru airport raise big questions on customer rights & for DGCA

Economy’s three cheers

Shaadi economics: As Indians’ incomes grow, the very rich will shift some spends abroad. But bulk of spending will be here

Why Beijing’s balloon is going bust

2023 will decide if Congress will be challenger number 1

Just not cricket: J&K cops arrest students celebrating India’s loss in World Cup final. That’s how UAPA is misused

Silkyara’s 2 lessons: First, when agencies work together, even tough jobs can be tackled. Second, revisit project risk assessment

Chennai Talkies

Jug Suraiya

Juggle-Bandhi

Chetan Bhagat

The Underage Optimist,TOI Edit Page

Bachi Karkaria

Erratica,TOI Edit Page,Tracking Indian Communities

TOP EDITORIALS

• Nurturing nature with Guru Nanak’s ec
• What jhumka? I said it first, in Bangalore!

Challenges of Succession Planning in Family Business

Family businesses have a significant presence in the global economy. Family businesses are owned and managed mostly by the members of a single family and the control therefore lies majorly in the hands of family. Family businesses possess a unique feature of combining family and business together which render unique benefits but at the same time confront them with unique challenges also. Looking into the history, family businesses are generally short-lived and fail to survive beyond second or third generation. The primary reason in most cases being the lack of succession planning. Succession planning creates a leadership pipeline in the business and there is never a situation of stagnation when the owner retires or dies. Lack of succession planning has often resulted into sibling rivalry leading to family clashes and splitting up of the business. The scenario has however changed over time and family businesses throughout the world have realized the importance of succession planning.

The challenges of succession planning

Succession planning is integral to the survival of a family business but there are several challenges involved in planning for succession. Let’s discuss them one by one:

• Emotions Involved

One of the most difficult challenges in succession planning of family businesses lie in the emotional involvement of the members. Though everybody knows the owner’s death is inevitable yet nobody likes to discuss and plan about it. Thus, succession planning is a very delicate issue and is often avoided.

• Patriarch Culture

As far as Indian scenario is concerned, here the society observes a patriarch culture and therefore it is assumed that once the current owner retires or dies, the eldest son will be the heir. But the problem arises when he is incompetent or incapable of managing the business. Harsh decisions need to be taken and many times this gives birth to sibling rivalry.

• Unwillingness towards Family Business

The youth today believe in making their career decisions themselves. So children in the family business may have varying career aspirations and may not be willing to take over the family business as their profession for life.

• Clashes for Control

Everybody in the family wants to occupy dominant position in the business and it many times results into family clashes. The desire to control the business among siblings is one of the important challenges in family businesses. When the family is large and there are many members competing for the same position, succession planning becomes very difficult because of the involvement of emotions.

• Outside Talent is Limited

In most family businesses the top management positions are occupied by family members. It makes them unattractive to larger talent pool of job seekers available outside the family. The choice for successor while doing succession planning is therefore very much restricted in family businesses.

• Negligence of Formal Training

A large number of family businesses are often seen neglecting the need for formal education and training of the prospective successor from the family. They ignore the fact that succession planning should be done at an early age and the successor should be provided with on-the-job training. This results into incompetent successor.

• Unprofessional Attitude

It is also observed that family businesses often adopt a very unprofessional approach towards succession planning. Most of the family firms either do not do any kind of succession planning or even if they do, they hesitate to discuss the issue of succession and keep it a strictly confidential matter. But this many times lead to making wrong decisions.

However, the scenario towards succession planning is changing fast and today it is one of the priority concerns of the family businesses across the world.

• Manikutty, S. (May 15, 2011).  Managing Succession. Business Today. Retrieved from: http://businesstoday.intoday.in/story/family-businesses-succession-in-india/1/15177.html
• Zwick, G.A. & Jurinski, J.J. (1999). Tax and Financial Planning for the Closely Held Family Business. Library of Congress.
• Click to share on Twitter (Opens in new window)
• Click to share on Facebook (Opens in new window)
• Click to share on LinkedIn (Opens in new window)
• Click to share on WhatsApp (Opens in new window)
• Click to share on Telegram (Opens in new window)

Notify me of follow-up comments by email.

proofreading

• News & Press
• Succession Planning
• Ownership Planning
• Management and Leadership Planning
• Business Planning
• Family Planning
• Family Renewal Retreat
• Free Assessment
• Case Studies
• Vision for Success

All Business Planning Case Studies Family Planning Featured In Management And Leadership Most Read Articles Ownership Planning Succession Planning Twin Cities Business

Family Renewal Retreat™

Schedule your free orientation meeting., tom hubler will give you a free orientation..

• Key family business issues
• Plans necessary for the success of your family-owned business
• Possibilities and expectations
• Terms of the relationship

Family Businesses And Succession Planning Challenges

The majority of privately-held companies in the u.s. are family-owned, and more than 75% of family business owners have contemplated passing ownership to the next generation. trends show that only 30% of these businesses will survive into the second generation, meaning things don’t always go as planned. 1, unexpected economic downturns, lack of a capable heir, poor tax and estate planning, sentimental value of the business.

BLAISE GAMMON

Blaise supports Mariner Capital Advisors on sell-side and buy-side M&A engagement, performing financial analysis, market research and due diligence. Additionally, he assists in valuations of private businesses and business interests for the purposes of mergers and acquisitions, gift and estate planning, charitable giving, and tax and financial reporting.

Blaise holds an MBA and a bachelor’s degree in finance from Kansas State University.

CAMERON DIAMOND

Tel: (913) 378-0408 [email protected]

Cameron joined Mariner Capital Advisors in 2021 as an investment banking analyst and provides support on valuation advisory and sell-side M&A engagements. Prior to joining Mariner Capital Advisors, Cameron was a Private Equity Analyst Intern at Apis Holdings, a middle-market private equity firm affiliated with a large family office.

Cameron holds two bachelor’s degrees in finance and management from the University of Tulsa, where he graduated with distinguished honors as a Presidential Leadership Fellow and honor student. During his time at the University of Tulsa, Cameron held leadership roles in multiple student organizations and served as the head Portfolio Analysis and Risk Chair of the university’s investment fund.

Download PDF

Vice President

Tel: (913) 904-5446 | Mobile: (816) 308-0563 [email protected]

As vice president, Tim supports the firm through sell-side and buy-side merger and acquisition engagements. He plays an active role in managing projects from start to finish, which includes preparing offering materials, financial analysis and leading due diligence.

Prior to joining Mariner Capital Advisors, Tim worked for “Big 4” public accounting firms and publicly listed companies.

Tim holds a Master of Accounting degree from the University of Missouri-Kansas City and is currently pursuing his MBA with a concentration in finance from Rockhurst University.

Family Business

Five Challenges That Could Derail a Succession Plan

• Share on LinkedIn
• Share on Facebook
• Share on Twitter
• Share via Email
• Download PDF

Chinese family firms are a force for change in China, bringing a renewed interest in family entrepreneurship to the forefront. Notwithstanding the rapid changes taking place at the very core of Chinese family businesses, founders share five common challenges when it comes to succession. By reflecting on the simple principles below, owner-managers can advance the succession process in their firms without the disruption that often characterises poorly prepared transitions.

Family-owned businesses that have survived the five great succession challenges have lived to be hundreds of years old, some more than a thousand years. They continue to thrive because they have ensured smooth successions from one generation to the next, as have the following examples of family-owned companies from around the world:

• Peugeot – The famous French automobile company was controlled and managed by the same family from 1810 to 2014, when they sold off its controlling share to a Chinese carmaker and the French state.

• Jardine Matheson – One of the original Hong Kong trading houses or Hongs, Jardine Matheson Holdings has been controlled by the Keswick family throughout its 185-year existence.

• Tata Group – Owned and managed by the Tata family since 1868, the conglomerate has contributed much to India’s transformation into one of the most dynamic emerging countries in the world.

• Ford Motor Company – One of the most recognisable names in the United States, the automaker dates back to 1903 when Henry Ford introduced mass manufacturing of cars.

Chinese founders can learn many lessons from these tried and tested winners. To ensure their own longevity they should master the five challenges below.

1. Understanding the culture of succession

All successions are a product of the cultural norms that prevail in the particular country or region. Succession is shaped by the formal and informal rules of the specific environment in which families live and run their businesses. Influenced by Confucianism, Taoism and Buddhism, China’s culture transcends the individual, favouring collective or group initiatives instead. In this cultural setting, family members who are interested in joining the family business may not think their voice is being heard by the founders. If these key individuals are overlooked in favour of group recognition, the generational transfer of ownership and management of their family-run firms may not happen as planned. Hence, owner-managers should play a unifying role to prevent next gens from looking outside their family businesses for recognition.

2. Transferring family assets to the next generation

Family assets are unique value-creating resources – they include the name, reputation, legacy, networks, cultural traditions and values of the family. While successful founders have proven that they can contribute assets to their firms, a key challenge is how to transfer these assets to the next generations and how to institutionalise entrepreneurial spirit. Owner-managers can act as role models, spending more time with next gens, taking them to business meetings, working out the governance structures, etc. Founders must find relevant knowledge-transfer measures if they want to maintain the momentum of the business in the transition to the next generation.

3. Developing competent children

Today’s Chinese family businesses often have members of two or three generations working side-by-side on the shop floor. In this situation, founders face the challenge of overcoming educational differences. Next gens often want to develop their CVs, while elders are proud of their knowledge acquired from years of experience. While showing tolerance and respect, founders should not neglect higher educational opportunities for next gens, encouraging them to enrol in business schools abroad. They should also encourage next gens to obtain solid management experience outside the family firm. Having solid management skills and business experience, next gens will be in a better position to qualify for top roles in their family firms.

4. Communicating across the generation gap

In traditional Chinese culture, first-borns see themselves as junior in relation to their parents or elders, but senior in relation to younger siblings. This dual identity can inhibit personal and professional development if ideas from below are treated as less valuable than those from above. Fixed patterns can become etched in stone and resistance to change endemic. When Chinese families send their children overseas to be educated, the learning they bring back may be ‘lost in translation’. Hence tools for communication must be developed within the family and the firm to manage the expectations of heirs, while ensuring that the older generation does not lose face. This suggests a counter-intuitive style of communication that emphasises risk-taking where innovation and new ideas are fostered, and which reflects the entrepreneurial spirit that founders seek to pass on.

5. Engaging in long-term planning

For many founders and owner-managers there’s scarcely time enough in the day to look after their own short-term needs, much less the long-term needs of their heirs. Most will start planning for succession far too late in the game or not at all. But what if a founder suddenly comes face-to-face with a health shock? The family is then thrown into a succession crisis with no long-term planning to guide them. Research shows that only 22 percent of Chinese founders have succession plans in place. Without a plan, next gens lack the guidance they need to manage a successful transition. Founders who have not developed a plan for the future often look amateurish and unprofessional in the eyes of their next gens. Disillusioned by the confusing signals coming from above, heirs may pursue other career options available and often commit to alternatives outside the family business, leaving no successors to take over the firm.

If founders respond to these five simple challenges of succession, the likelihood will be greatly increased that their families and firms will run smoothly for generations to come. By building a solid foundation upon which their firms will prosper and grow, they will bring longevity within reach.

About the author(s)

Morten bennedsen.

is a Visiting Professor of Economics at INSEAD. His main research area is the governance of family firms and other closely held corporations in a global context.

Brian Henry

Brian Henry is an INSEAD Research Fellow.

About the series

Corporate governance, share this post, view comments, no comments yet., leave a comment, please log in or sign up to comment., related reads.

The Key to Making Succession Work in Family Business

J. Bai Li, H. Piezunka

Leadership & Organisations

What Generations X, Y and Z Want from Work Technology

Henrik Bresman & Vinika D. Rao

Why the Whole Board Needs to be on Top of Risk Management

Our website has a lot of features which will not display correctly without Javascript.

Please enable Javascript in your browser

Here how you can do it: http://enable-javascript.com