A strong willed founder sees an opportunity, builds clientele and services and all suddenly disappears leaving the business at risk. Academicians Sascha Becker and Hans Hvide in their study of 341 privately owned companies observed that the death of founder in the first 10 years of the establishment had a deep and profound effect on the survival of the company. Unlisted and family owned business are awful poor at planning for future. Many business owners and family CEO’s just do not know how to prepare for eventuality. From our consulting experience we suggest a 8 point approach. First evaluate the family’s interest and children suitability for roles and responsibilities in the company. Involve outside professionals and independent directors to provide third party neutral assessment of the children and seek their suggestions on who could possibly more suited to run the business in future. Once assessment is made, communicate the decision within the family and children, seek their opinions and arrive at consensus. Biggest challenge is preparing them for a change. Ask independent directors and family to suggest a management structure without compromising the legal and family interests. Involve the management group in creation of a succession plan and document the role of each family member, responsibilities they could carry and the possible succession plans. Communicate the plans to all the involved parties and formalize the succession plan. Identify the competencies the successor may need, training gaps and development support needed. Hire and fill professionals in roles that may be needed in future and start implementation of the succession plan with a dry run. Take a vacation and see how the succession team is responding to the business needs. Start stepping back over time, and allow them to learn from failure.
