As a Family Business Advisor, what I have observed is, our assumptions of next generation joining in a specific time frame with certain expertise fails many times. This makes us uncertain about continuity of our family business. This article will highlight some points which can provide you tips (objective is to trigger your thought process) to initiate the process of business continuity plan.
The task is not only to make our next generation responsible for leading business operations; but also, to prepare them to take up responsibilities of family wealth and family values. For the continuity of any family business, the family must share common mission, values and trust.
It’s not only about transferring control and wealth, it’s also about making them learn to remain bonded with family values while managing family assets. For this to happen the “Family Mission and value” statements should be well defined and explained to all family members who are beneficiaries. Shared mission brings harmony to the family and periodical review of this in meetings will help the family to maintain trust and communication.
Above all a “Mission and value” statement provides a sense of meaning and identity to our next generation family team. It gives the feeling of being part of something important and special.
Some sample mission statements:
- Wal-Mart “To give ordinary folk the chance to buy the same thing as rich people.”
- Mary Kay Cosmetics “To give unlimited opportunity to women.”
- 3M “To solve unsolved problems innovatively”
Documenting the distribution of wealth and role for each one will keep everyone interested and vocal about their expectations. The benefits are decision making becomes simple, clarity among family members about required skills & knowledge to remain successful. Dealing with conflict becomes more accurate which in turn, helps the family business continuity.
The key for business success and continuity is good governance. Purpose and ethical principles (mission and value) statements can provide a strong base and guideline to build a healthy family relationship with active communication and trust among family members. Based on this positive culture, Business families can build good governance, which can be controlled under the guidance of family business board.
The biggest nightmare for many family businesses is, its generational Business continuity. The key responsibility of family business leader is to turn this worst nightmare into a road map for business continuity.
Chandrasekhar Anant Bhat