ADVOCATE COLUMN 2nd WEEK OCTOBER 2015
If you are a business owner wouldn’t it be great if your business could continue to grow long after you are no longer in a position to participate in it and that all your hard work and investment you have put into it was to result in a long lasting legacy. Part of the character Northland business is the high number of small businesses and the important contribution of family businesses to our GDP. By their very nature family businesses can for a number of reasons have a relatively finite lifespan. This does not need to be the case but the reality is that only a very small percentage continue under the second generation and even less extend beyond that. This in part may have something to do with insufficient attention to governance and succession or may just be and unwillingness of business owners to confront their own mortality.
I think an essential part of any business plan should be what are you going to do when you no longer have the passion to do what you do now or changes in personal circumstance, force a change on you. If it is a family business then the ability of other family members to take over the business may be limited by their financial capacity. So advanced planning and open and frank conversations with all interested parties is also necessary
Families being families’, disputes will arise often in relation to remuneration, division of labour and performance. This why good governance is essential because it can provide the formal framework to develop and implement a strategy to ensure that the business that the family has worked so hard in for many years can continue to benefit the family, community and economy in which it is located long after its founders have decided to take advantage of other pursuits that their community has to offer.
All this requires planning and it is never too early to start the process. If you know who your successor is to be, how do you ensure they have desire and skills for the undertaking. How will assets be transferred and when will you hand over control. Remember that you are not the only party involved, there will be the successor, staff and other key stakeholders who will also need to be involved in the process if it is to go smoothly and successfully. Finally when you go, walk away and let the new owner make the decisions and take control of the businesses destiny.