Family or private business succession planning
For this blog, we interviewed Andrea Fredrickson, President of Revela. She and her family own several businesses and work closely with privately held businesses across the country. Today she is answering a few questions about succession planning as it relates to running the business, not the specific financial and legal aspects of succession planning.
- What is succession planning? For the purpose of this blog, succession planning is the process of identifying and developing candidates to fill key positions within the company. Many owners and executives think about the fact that they should be doing something about this, but thinking is as far as it gets until it is too late.
- When should an owner start the planning process? Succession planning should start as soon as possible. It’s never too early to start identifying the knowledge, skills, experience, and beliefs that a person should have to be effective in each role. Once those are identified, begin to assess various people to see how well they match up.
- Where do people get hung up when choosing their successor? When choosing their successor, often times the owner believes the successor should be just like them; same relationship building or sales ability, same understanding and experience in accounting, or other such skill. Sometimes executives think a candidate is too young. It’s important to identify what will be needed in the future.
- What can an owner/executive do to prepare candidates for future positions? If you’re considering a member of the family, be sure that they have worked in another business for a few years. This will give them perspective and allow them to bring something to your business from their experience. Create a plan. Identify the roles and positions the person will progress through to gain experience and knowledge. The plan should also include ways for the candidate to develop specific skills such as reading financial statements and other skills related to the company.
- What if you have multiple children? How do I choose between them and be fair? This is one of the most difficult questions. First, find out what each individual’s interest is in the business. Is it to run the business? Be on the board and some management or other position? Be on the board only? Or Nothing? You may want to consider creating a ‘Family Council.’ This is where family members are educated on the business; learn how strategies are created, important decisions were made, etc. They have no decision or voting rights. Only education. This can help family members determine the role they may have interest in. From there you let them know how you will be assessing each person; determining future requirements, then training and mentoring to determine fit.
- What if none of the family members are capable of running the business or are interested? You have a couple of options: Sell the business (ESOP or other buyer) or the family can retain ownership with an employee running the business.
Some final thoughts. Succession planning often gets put off because we think we have time. The reality is you never know. Succession planning takes time. The hardest part is simply starting.
For more than 20 years, Revela has helped guide people in leadership roles to recognize their strengths, develop their skills and create a relationship with their team that builds confidence, fosters communication, and celebrates personal success. Revela believes in coaching rather than teaching. Self-awareness over textbook examples. Personalization versus cookie-cutter. For more information about Revela and our service offerings, visit RevelaGroup.com or call 712-322-1112.
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Andrea Fredrickson and her father started Revela over 25 years ago, where she is now the sole owner. Andrea and her team work with family-owned and other privately-held companies across the country to help develop strategy, goals, organizational structure, and leadership skills to foster company growth. Raised in Southwest Iowa, she now lives in Omaha, Nebraska and is involved with several non-profit organizations and the other businesses her family owns. She has degrees in education, management, and post graduate work in organizational behavior. She has worked with the leaders and employees of TS Bank and its affiliates since 2005.