• Friday, March 29, 2024
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BusinessDay

How to cancel death sentence on your business

family business
Successful family businesses have within them both the ability to live and the ability to die. According to global research, almost 90% of family businesses will not make it to the third generation. In Nigeria, it is even hard to find a successful and thriving three generation family business. This means that your seemingly successful and thriving business today may be dead by September 16th, 2109 which is exactly three generations from now. The reason for this massive murder of family businesses is the lack of a timely, well-planned and well-documented succession plan. According to the survey by PricewaterhouseCoopers 2014, only 16 percent of family businesses have a documented succession plan. Having no succession plan in place is a plan in itself and this plan is inevitably death. If your Business has no succession plan, it means it is already dying. It is up to you to decide whether you want this death to continue or whether you want to stop this death from happening to your business.
 If you were Methuselah, the oldest person on record in human history who died at age of 969, you would live longer than three generations that saving your business from the three generation death sentence will not be a problem. But unlike Methuselah, you and the whole of humanity as we know it today has a significantly shorter life span. Research shows that the average life expectancy for men is 68 years and 4 months and for women is 72 years and 8 months.  This means that your time here will soon be over. When it eventually does, how would your business survive the unfortunate fate described by the famous Chinese proverb, “shirtsleeves to shirtsleeves in three generations”. Would your wealth be spared like that of Rockefeller or would your wealth be murdered like that of the Vanderbilt?
 Preserving wealth and family businesses across multiple generations require a certain type of skills that are vastly different from the skills required for building and sustaining businesses within one generation. While the creation of your business involved your individual determination, the wisdom and lessons gleaned from the grind and sacrifice of building a business from scratch, subsequent generation will have to be helped to develop collaborative skills as well as the skills required for creating additional wealth from existing wealth. Without these skills the longevity of your business is already determined. Not planning for succession is choosing to buy a future of tragedy.
So what can wealth creators do to reverse the hands of death and position their businesses for long-term success?
The answer is simple and it is two faceted.
Firstly, business leaders must treat succession as a top priority. Sometimes the delay in succession planning results from the lack of confidence in the competence and sometimes credibility of the next generation. In some cases these competencies are truly absent and can be acquired if the right kind of help is sought. Other times it is that business leaders are reluctant to accept the new ideas and challenge the younger generation brings into a business and may want to keep operating the business the same way. However, business leaders must understand that not all businesses are designed to be multi-generational businesses and some businesses may even become obsolete during the lifetime of the founder. Even when businesses remain relevant throughout the first generation, it is very unlikely that it will remain the same in shape and form in the second or third generation. The younger generation must, therefore, be given the room to create new ideas and adapt the businesses to meet the demands of the future. It is this openness of the business leader and the emotional detachment from the initial business idea that make succession smooth and family businesses resilient over the long-term.
Secondly, business leaders must manage their need for control with their need to become multigenerational heroes. The longer a business leader remains at the helm of affairs in the family business, the more successful he will likely become in his lifetime career, but the sooner he will also be forgotten. To create a multigenerational legacy, business leaders must develop a series of transfer signals that should initiate the beginning of the succession process.
 To begin succession, business leaders must clearly articulate the criteria for a competent successor that will take over from them. They must understand how they judge competence and how they come to trust. Successors, on the other hand, must know exactly how they can earn the trust of the business leader, be seen as competent and fulfill their career goals. Business leaders and successors must be guided to gradually shift base through a series of role adjustment until the succession and handover process is complete. The business leader must move from sole operators or monarchs having preeminent powers over their business to overseer-delegator, from where he finally must transition to consultant who is disengaged from the organization.
 At the same time, the successors must progress from having no role to being a helper (monarch), to a manager, (under the monitoring of the overseer-delegator) and finally, leader/chief decision-maker (when the owner is disengaged and the successor is weaned from the founder’s direct “micro-managing”). Thus, in a carefully planned succession process, both the leader and successor advance through these stages simultaneously to maintain a healthy relationship and promote trust throughout the process.
If family business leaders must break the three-generation barrier and grow their Businesses across multiple generations, they must tackle and not dodge the issue of succession. It is the responsibility of the current generation to successfully pass on the baton to the next generation while they are still alive as the longevity of their family businesses and wealth depends on it.
If you need help preparing the next generation for their role or breaking your business from the three-generation death sentence, we can help you. To get help Text “Business Succession”, to 08101860042 for a special report on how we can work together.

Grace Agada