Have you ever gathered your family, jumped in the car and just headed out on the road with no destination in mind? It is exciting and chaotic. Since the objective is simply to have fun, you do not need a map, or a plan, or reservations. You follow the road, turn left and right on a whim, and stay where you end up at dark. It all sounds like a wonderful adventure.
While spontaneity may connect you and your loved ones on the family road trip, it could very well create divisions during a family business transition.
By nature, a business family embraces different opinions, different perspectives, different goals, and different personalities. Aligning family members along an agreed-upon path can be challenging, yet it is an important step in transition planning.
Identify your values filter
A family’s values are its way of filtering and assessing the world around them, and making decisions when faced with important questions. While values are often inherent in a business family, they are not always clear. Identifying and discussing those values is a worthwhile exercise when beginning a journey of transition. The family can then refer back to its values filter to guide them throughout the process.
How to set your transition itinerary
Business families embarking on a transition journey should start by answering three simple yet not-so-simple questions: Where are we going? Where are we now? How will we get there?
Vision – Where are we going?
Unlike the random road trip, a family business transition is most successful when the family agrees on the destination. Without a common vision, business family members may find themselves working at odds with each other, or spending time and money on actions that take them nowhere. Even if the vision is somewhat blurry, a family that sees the same picture of the future is able to focus energy on the right actions — those that will take the family members to their desired destination.
The current state – Where are we now?
Every transition journey has a starting point. A business family that clearly understands the facts of its situation and the challenges at hand can eventually implement change. This part of the planning process is an opportunity for the family to analyze where it currently stands and engage in meaningful introspection. Done in a respectful way, this exercise can unite a family in the next step: finding solutions.
Strategy development – How will we get there?
Most business families are entrepreneurial – show them a need or a challenge and they will find a solution. Strategies are the activities the family will undertake over the ensuing months and years to address their identified challenges and reach their agreed-upon vision of the future.
Strategies for the transition of a family business should encompass three key pillars:
- Ownership - The fair transition of the business ownership and protection of the family wealth
- Business - The future success of the business and the transition of its leadership
- Family - The well-being of the family
Strategies are most effective when accompanied by an action plan, a timeline, and an identified leader to be accountable for implementation.
Three questions, three answers
A business family that sets out on a transition journey without a plan is at risk of becoming one of the unfortunate family business statistics. The Business Transition team at BDO includes trained facilitators and Family Enterprise Advisors. We help business families communicate and collaborate to answer the three key planning questions. We then accompany them on their journey to ensure the best possible outcome.For more information on how BDO can help with your business transition planing, please contact us: