Just In Case Something Happens to Me…
by Edwin A. Hoover, Ph.D. CMC
and Colette Lombard Hoover, M.S
LSi Resource for Family Business Management
Editor’s Note:The company described in this article is not an actual company but is a composite based on many family businesses we have worked with.The names are fictitious.
The last thing Judy Richardson expected was that her husband Gary would not make it out of the recovery room, dying from complications related to hip replacement surgery. Gary was only 61.The doctors assured him that the risks were few given his good health.No one imagined that a blood clot would tragically end his vibrant life.It was impossible to imagine the impact of the hole left in his family and in the business which he founded and ran for twenty-two years.”Thank God,” said Judy, “Gary left us those instructions about the business!”
Judy referred to the Emergency Management Transition (EMT) letter that Gary had written barely a year before his death.Like most successful entrepreneurs Gary was enthusiastic, optimistic and hard driving.The very same characteristics that make business owners successful also make it difficult for them to think about their mortality and planning beyond it. More…
Meeting the Challenges of Succession
in the Family Firm
by Thomas Davidow and Richard Narva
Succession from one generation to another does not happen by accident in a family-owned business.If you are interested in succession or the continuity of your business, you misunderstand that planning for that continuity is the critical factor.We believe the failure to adequately address the topic of succession is the primary reason that only 30% of family businesses continue into the second generation and that only 10% more continue into the third.
Succession exists as an underlying issue in all family firms, playing a tremendously important role in the life of the family, as well as the life of the business.Yet owners and operators of family enterprises rarely address succession, apparently because of its powerful psychological implications, which can sometimes be overwhelming.
Admittedly Succession Is A Complicated Topic
Thinking about and dealing with succession can be extremely demanding, both emotionally and intellectually.When you begin to examine the concept of succession, you must deal with aging,mortality, control and power, just for starters.In addition, the business issues that founders must simultaneously deal with include ownership, management, strategic planning, and professional relationships from one generation with the next generation.These relationships include key non-family managers, clients, suppliers, lawyers, accountants and bankers. More…