Succession planning is rewarding. It is more difficult in some businesses than others, but all can do it if they start early enough and follow simple rules. The following article is an exciting success story. An example of how it can work.
From Country Guide An Ontario Family’s Joint Path To Farm Succession
Succession Planning is difficult at the best of times, but businesses like farming and resorts tend to be harder. The cash flow to value ratio is not high enough to make financing easy. Farming and many other businesses are a lifestyle shared with family and so it has more dimensions than other businesses. Money may not solve all the problems.
I have often heard, “I can stop being his business partner, but I cannot stop being his brother.”
The point in the article of a moving target is well taken. It usually does not turn out exactly as people expect. Succession is like juggling. You need to keep several balls in the air at once, but if drop one, you sometimes drop them all. More problematic still, the balls do not remain the same. Some get heavier. Some go away entirely.
As we can see in the article, the minimum tool is communication. Prompt, open and honest. What people like to hear and what they do not. When one person is near to dropping a ball, some one else can keep it up so the others do not fall, but only if they know about the problem.
Succession is as much philosophy as it is science. The people who value its inherent elements and structure do well. Others do not. It pays to have people who have done it before explain how the various techniques and tools work. People who do things just once tend not to become exceptionally good at it. Hire help.
The article is worth your trouble to read even if you are not attached to the farming part of our economy.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.