Many people in Washington have spent their lifetimes building a family business to pass it on to their children one day. Yet, about 73% of companies still need a succession plan, and almost 70% of family businesses will fail during the second generation. If you want your company to succeed into future generations, consider creating a value-based succession plan.
Why succession planning is difficult
Succession planning is one of the most challenging things a business owner must do because it forces people to consider their demise. Once that hurdle is jumped, then the fact that the business owner wants to be fair to all their children must be considered, especially when some children may have no interest in the company while others work there daily. Any issues that the family is facing may become magnified in the business.
Definition of value-based succession plans
Value-based succession plans focus on building skills in people with the interest and ability to become the company’s next leader. Instead of being driven by position in the family, they are focused on identifying the people who exhibit the company’s core values the best.
Principles of value-based succession plans
Instead of focusing on business law, the company’s values serve as its mental, emotional and spiritual reservoir fueling its operations. Therefore, family members and stakeholders must identify and discuss these values regularly. Desired changes in the company’s direction must be enunciated if any occur. Then, the most likely people to take over the company must receive any further training they need. If any family member fails to gain the trust of other family members, they will be bypassed as the next leader.
Value-based succession allows family-owned businesses to be passed to the next generation based on the company’s values.