Many owners of small businesses give little if any thought to the process of choosing their business’ next leaders and preparing them to nurture the business and its value.
One attorney who works on this “succession planning” reports her clients usually plan a two-week vacation more carefully than the fate of their business.
Small businesses are prone to failure soon after the passing of their founders. In the end, without successful succession planning, it is often nearly impossible to maintain the value of a business for customers, partners and the owner’s heirs.
Devoted daughter finds herself locked out
In December 2017, in Pittsfield in western Massachusetts, an engineer died suddenly of a heart attack. He had a one-man business selling his own books about engineering, and his daughter made the decision to keep it going.
She found she did not know the password to the email account he used to communicate with customers, how to manage his copyrights, when to renew his business licenses, where he sold his books or how he advertised. When hackers hijacked his accounts, her problems only multiplied.
As a recent article by the Associated Press describes, hers is a common problem.
Challenges facing a family taking over
Customers often think of a small business as the owner. It can already be hard to convince them to stay when the face of the business vanishes. And when the transition turns out to be rocky, the business often dies.
Rocky transitions are typical. Often, competition breaks out within the family, and if the owner had partners, conflict can flare as the family tries to fill the vacancy. If court battles result, the drain on money, focus and good will can leave the business without value.
Having time to remember the founder
Amid conflict and grief, the family often must learn a business and an industry, understand records not designed to be understood, find out who the employees and customers as well as reassure everyone that everything will be fine.
Every business owner has a to-do list that is several items too long. Succession planning takes a bit of time and attention, but the true value of an owner’s time and attention often becomes clear when heirs enjoy the fruits of a solid succession plan