Best way to create a succession plan is to not create a succession plan

So many businesses, especially family and owner managed businesses, get so caught up with the term succession they do absolutely nothing about it. They may have an awareness but because it’s so daunting and involves emotions, communication and people (including relatives!) they freeze and bury their head in the sand. It’s common to hear stories of families and / businesses trying to look at succession for 10years and still not being any further forwards.

The thought of trying to begin planning is more petrifying than the potential implications of not having any plans in place – because that would be tomorrow’s problem and opening a can of worms is very much a fear for today. Of course there are practical reasons as to why people avoid succession as a topic too. Family and owner managed businesses are busy and short of time and resources so have no physical or metal capacity to start plus they are the wrong people to do it because they are so entrenched.

Imagine that you want to create a better looking bottom line – your profit. Where do you begin? Do you focus on profit? No.

Profit is the result, or “scores on the doors”. You have to be aware of it and how incredibly important of it because it’s a gauge of how you’re doing and what you can take as dividend and reinvest into the business – and even part of your valuation for sale should you wish to. Succession is the same.

Profit is the result achieved by driving revenue and controlling costs. Succession is the result of alignment, communication and what we refer to as GLAS. Most interventions and specialist projects that we run for clients do not focus on succession even though it’s acknowledged as critical. We work on a whole series of areas to create alignment but that focuses on a spectrum of areas that in turn create succession plans. No matter what the brief we will create an environment and process that throws out succession plans – and strangely enough everyone tells us at that point “well that was easy and obvious”. Yes, because we’ve stopped focusing on the “score” and we’re now actively in the game which creates a better “score” as a result.

Getting so caught up in starting to build a succession plan is the biggest barrier to actually creating one so don’t! Trust in a specialist team to align you, your family (and / or management team), your business, your external community and your reason for being – the purpose. That creates a living, breathing succession plan which I would then consider as being the best way to future proof you, your family, your business and your wealth.

Calling Midlands Women in Family Businesses

Dani Saveker, having known what would have helped her during her duties at CEO of her family’s businesses inBirmingham,  has been running a specialist peer group for family businesses for almost three years. The Group has recently added new members, but there is something very special about this group.

Not only does this group focus on family enterprises and the often complex issues that are faced within them, but every member of the Group is a strong, inspirational and ambitious woman.


Dani says:

“When I formed the Birmingham Insight Group, I set out to provide the support necessary when you’re part of your family business. I was fed up trying to explain to non-family business folk how dysfunctional but fabulous our business was. To come together with other people that already understand this is fantastic.

I have never been interested in ‘women only’ groups but what I discovered in this collection of amazing ladies is that they are from such a diverse background that they bring and take incredible value from each other. Each meeting is a half a day of incredible courage, honesty and innovation as well as support at a personal, family and business level. The impact is incredibly positive on their businesses and relationships as well as how they are now able to cope in a far more positive way. These women tell me that the group has literally changed their lives for which I am so proud”

The Group is looking for an additional 3 members – so if you’re part of your West Midlands based family business (or you are based in the West Midlands) and in a management role (not necessarily director or shareholder) and would like to see what the group is all about we would to hear from – please email: dani@fibcommunity.com directly

We are running sessions on 25th July between 8.30am – 10.30am and 22nd August between 8.30am-1pm.

The Group’s existing members must be accept and invite new members to formally join the Group following a taster session.

Insight Groups are from non competing businesses and so this group is reaching out to women in their family businesses providing they are from the following industries:

  • Construction
  • Haulage
  • Leisure / hospitality
  • Retail
  • Waste Management
  • Professional Services
  • Agriculture

 

The End of SMEs

The term SME is something I’m very familiar with having run a family enterprise for many years. Our business was referred to as being a traditional family-owned manufacturing SME (or SME metal basher). These ‘SME’ businesses represent 99% of all enterprises in the European Union. 

So why is it that when I hear the term SME I wince?

It makes me think of the 1970’s and the first factory I remember going into when visiting my grandfather – I was 5 years old and the place was pretty dark due to small windows and poor lighting. The factory had various levels of concrete flooring, rickety old staircases, pulleys and conveyor belts, foremen wearing blue overcoats and leaking roof where buildings had been joined together over the years.

These are incredibly fond memories and when I close my eyes I can almost still hear the repetitive thud of the power presses at work, the hustle and bustle of a large workforce and the distinct smell of oil and metal being cut on semi-auto saws. This was the same smell that my grandfather carried on him, that and the smell of his pipe!

So the factory that I first remember isn’t my reason for wincing at the term SME but more the time it represented and that for me, and many others, describes businesses of the past. What’s more it takes us to back to historic management practices, and old view of manufacturing and seems to focus more on the business entity than what really matters – the people.

The European Union recommendations from 2003 defines Small and Medium Enterprises (SMEs) as being based on employing under 250 people and having a turnover of under  50m EUR.

I often ask business owners about the term and they respond by saying they just don’t like it – and actually find it incorrectly describing today’s businesses. No one wants to be called ‘Small’. No one seems to be clear at what point you become ‘Medium’.

They will also often say that SME makes them think of old school manufacturing rather than innovation, lean manufacturing and all of the other businesses that are now within the ‘under £50m’ category – many of which are not manufacturing but in service provision and technology. In 1997 we moved our family enterprise into a beautiful fit for purpose 60,000 sq ft production facility, a far cry from the 1920’s buildings that had been pieced together as we’d grown. That’s when we stopped being an SME in my opinion.

The world is changing. Life is changing. Work is changing. Why isn’t the way we look at enterprise changing at the same pace?

We do know that almost all of these businesses are family or owner managed. They have the challenges of growth, skills, succession, capacity and those associated with being privately owned.

We, therefore, refer to these businesses as family or owner managed enterprises – putting the ‘people first’. For us we don’t refer to SMEs anymore but rather that we work and support FOMEs.

Isn’t it time to realise that many terms once used around business are no longer relevant. The term SME no longer fits with aspiring businesses focusing on growth, innovation, advancement and productivity in today and tomorrow’s world.

Read The End of Work Life Balance

GLAS launch

Thursday 10th November saw the official launch of Dani Saveker’s 20 years of work as GLAS (The Global Life Alignment System)  was revealed at the Beyond Business Summit at family-owned Heythrop Park in Oxfordshire.

         
 

 

 

 

 

A room of specially selected family businesses and professional advisers were taken through a fascinating and revealing day which ran through the 5 critical elements of the GLAS. Designed to help individuals, teams, families and businesses to unlock potential enabling succession and future proofing, an ability to make decisions, gain clarity and focus and create a sense of personal balance and purpose.

GLAS isn’t just for family businesses…. GLAS is available to anyone at anytime in any situation – but Dani was delighted that the first reveal was to a family business focused audience given her own background!

With brightly coloured branding, unorthodoxed materials and approaches the audience enjoyed a fascinating journey of discovery, thought and interaction with warmth and energy, shared stories and many light bulb moments.

To watch the video played at the end of the session on Dani’s random acts of kindness, see below

Myths of succession

Succession is tomorrow’s problem. 

Putting the subject on the back burner believing we don’t need to worry about it because there are years to plan is dangerous. You risk the unexpected catching you out – in extreme cases the key family and business person being taken seriously ill or passing away. The majority of family enterprises are owner managed and extremely hands on dealing with the day to day challenges of the business. It is vital to always be considering the “what if…” question and scenarios. All business leaders, even as a 30 something founder of a new business, have a responsibility to think about this from day one. It’s vital to take time to work on the business as well as in it.

 

Succession is about appointing the next leader.

Succession is not about passing the business to one person but considering holistic future planning and protection. It’s vital to consider ownership, business, individual, family and wealth needs and wants. The best succession strategies look at skills, market conditions, opportunities, investment, R & D, evolving society, technology etc as well as the family role and the wishes of those impacted by the business. We would rather have people focus on future proofing and transitioning

 

Succession = one in and one out

We would also ban the term retirement, it no longer means “pipe, slippers and death”. Transitioning is about a developing strategy to carefully evolve the roles played for new and existing people at all levels of the organisation. Successful processes ensure that there is room for the incumbent generation as well as the future generation – both are as vital. Designing the strategy allows everyone to influence and understand their next phase and it should be gradual and done with support for all and open communication.

 

Succession is a big deal with a plan

No. Succession is a living breathing process of transferring knowledge, experience, values and much more – not just to a newer generation but also up to the incumbent generation. We should never stop learning and it’s not about creating a one off plan. It’s a process with supporting strategy which should be reviewed and developed on a continual basis. From founding generation to multiple generation, each should be adding value as they pass it on and this should be part of the discussion.

 

Succession is something I’ll decide on and let other know about when I’m ready

It’s rare that one person deciding on a how the future will be, especially when they won’t be part of it, works well. It is very much an inclusive process that should involve all those that influence and are influenced by the business and future decisions. It’s vital to have buy-in from everyone or at least involve them in the process as this is a huge opportunity to consider ideas you’d not thought of and also to share the burden and responsibility. This approach allows relationships to be strengthened rather than undermined and opportunities to be seized.

 

Succession is a family only matter 

No. Traditionally family enterprises would keep plans to themselves. Employees aren’t daft, they know that the MD or CEO is 80 and nothing has been done to ensure longevity and the future – and so guess what… they’re looking for new jobs. The best businesses with successful transitioning strategies involve their often loyal employees and certainly keep them informed to reassure them.

 

Succession is something we will sort ourselves

We work with many families and businesses who have been trying to work on a strategy themselves for up to 10 years without success and spiralled into toxic situations as a result. Some do involve their professional advisers but are trying to fix issues that they don’t really understand and don’t really want to face. When you’re within the process it’s very difficult to overcome the dynamics and emotions and see the complete picture. Even those that believe that they have created a great strategy usually head in the wrong direction because the process was flawed. Using specialised neutral support can save time, money, frustrations and relationships as well as giving piece of mind. Family enterprises very often internalise and are the wrong people to “solve the succession dilemma” themselves. To ensure a successful process, plan and outcome using neutral support is usually the very best way.

 

Succession strategies are good enough

We always recommend that any future planning and strategic development is supported by suitable protection such as a family charter or constitution and Shareholders Agreement. Creating the rules to play by is simple when everyone is sharing the vision and onboard. When things go awry or take you unawares, that’s when documents and protection can be so useful. Believe me, we see so many examples of this happening even for the closest most loving families.

 

Succession is just for family businesses

There are many things that family enterprises can teach us and the importance of future proofing your organisation and building a robust transitioning strategy is one. We see professional firms, public companies, schools, public sector organisations and more all struggling with precisely this.

Bristol family firms expecting good things

Bristol family firms expecting good things as they reveal ambitious plans for growth

Bristol and South West based family firms are positive about the next 12-months for their business and the region’s economy, but see the ongoing skills challenge and financial institutions’ reticence to provide funding as major threats to their ambitious plans for growth.

Family businesses from the food, healthcare, science, locomotive, leisure, packaging, waste management and construction sectors met at Bristol’s Tortworth Court Hotel at an event hosted by the family business sector’s leading independent support and consultancy organisation, Families in Business (FiB).

Despite uncertainty around Brexit and the UK economy, the family businesses taking part in discussions at the event revealed they are expecting good things over the coming months, with a desire to invest in growing the business, despite economic uncertainty in the wake of the EU Referendum.

However, they feel that banks are still closed to supporting private enterprise or providing capital to aid growth, but said that this is countered by the ability to act quickly that goes hand-in-hand with being a family business so are agile, able to seize opportunities, and take and act on decisions quickly.

CEO of FiB, Dani Saveker, comments: “Whilst issues around succession were evident for the majority of the family businesses taking part, there were many inspirational, personal accounts of individuals’ journeys and how they came to be part of their family’s business. For many, this is often not a first choice, and support and networks are seen as vital to help them fulfil the role or challenges they face at its helm, and share experiences and worries with their peers.

“Ambition and positivity amongst the family firms at the event was tangible, but there was strong evidence this brings other personal and business challenges – from funding for and capacity to handle growth, reluctance of the incumbent generation to let go of the day-to-day running of the business, to a passion that the business will remain family-owned, and concern that the right individuals are in place and in the right role.”

Amongst the main findings:

  • The loss of business’ founding family member carries a huge personal and professional impact for surviving family members as well as the family firm, and protecting the business and family should not be overlooked but shareholders agreements and Wills must be utilised.
  • The generation leading the business is fearful of letting down previous generations, but if handled positively these emotions can be motivational and channeled to herald a new, confident and successful new chapter for the family firm.
  • Family firms are committed to bettering themselves and their leaders, becoming the very best possible business men and women, and learning from the lessons learned during 2008.
  • Family businesses are focused on working hard to grow over the coming 12 months, through building productivity, great products, and developing improved structures and systems.
  • Family businesses are committed to looking after their staff well, so consider the National Living Wage a burden for the business.
  • Finding and retaining the talent and skills to support growth remains a challenge.

The event raised £260 for Bristol charity Above & Beyond, which raises funds to make a difference to the care of some 500,000 patients, their families and friends, at Bristol’s city centre hospitals each year, and the 8,000 NHS staff who care for them.

The event was supported by solicitors Veale Wasborough Vizards, Close Brothers Asset Management and accountancy firm Mazars LLP.

Families in Business (FiB) is the specialist division of the Shirlaws Group, and focuses on dynamics and relationships and how they impact family and privately owned enterprises.

 

It is the UK’s only neutral organisation run solely for family businesses, privately-owned enterprises and entrepreneurs, and has a team of professionals with on-the-job, first-hand experience of working in a family business. It operates across the UK and increasingly worldwide via a rapidly growing network of offices, to provide support, consultancy and membership to family firms and their owners.

All Work No Play

Dani Saveker explains how Families in Business provides the ‘permission to play’ to accelerate business growth and experience a thoroughly more enjoyable journey, ahead of the inaugural Families in Business Summit on the 28th and 29th September.

“In a recent study, FiB found that over half of the individuals working in family enterprises place little or no priority on fun.

“This is significant.

“When you see that 83% place the most importance and focus on the day to day business needs, you see two things; firstly, that they are extremely challenged by current issues, and secondly they aren’t building play into their work. For the vast majority, it doesn’t feel much like fun and they can’t see any further ahead than today.

“So why is fun and play especially important? Play is the way in which all humans and many animals learn, compete and excel. Play is also the best environment to create trust and creativity without fear of failure. It is one of the most valuable ways to create and maintain alignment from individuals to their purpose and through teams, the business and external world.

“When we work with family enterprises we find that virtually every single person, which includes leaders, next generation executives and non family employees, tell us that they are struggling to cope with life as it is today. Nine out of ten also tell us they feel a real lack of purpose. So why are we struggling so much?

“Isolation, loneliness and a lack of empathy are the human costs of a changing society but the business case for play is also significant. With businesses facing change, challenge and confusion in a time of uncertainty it is essential to have the best skills and talent possible. 70% of family enterprises admit to having no focus or strategy around innovation, creativity and development leaving them vulnerable. Standing still is not a long term plan. It’s time to introduce play.

“From the family relationships in family owned and run businesses, to the wider relationships, everyone needs to be aligned to a clear vision. By granting a permission to play and connecting to the overall purpose for the business and those in and around it, it’s far easier to accelerate growth and experience a thoroughly enjoyable journey.”

The first-ever Families in Business Summit will further explore the problems of not allowing play into the workplace, and through a programme of keynote speeches from family business leaders and advisers, to interactive workshops and break-out sessions, will provide a portfolio of solutions to support family and owner managed enterprises place play at the heart of their businesses.

“Ridding performance anxiety, unlocks creativity and supercharges our ability to innovate,” explains Dani. “I’m not saying don’t take things seriously, far from it, but I am a strong believer in the need to create this space.”

For more information about the FiB Summit and details of how to reserve a space: Register online

To read more about the importance and role of ‘play’, read Dani Saveker’s interview with CampdenFB: http://www.campdenfb.com/article/business-case-fun

Communication A Challenge At the Heart 

Having recently completed another year of research and our annual survey into the challenges that family businesses face – not just now but into the future – we again seeing the ever present issue of communication. In fact the challenges around communication seem to be increasing. So why is that and what can be done?

We now have increasing generation gaps with the average age to be a first time parent increasing to 30 years old,  a 10 year increase. This in itself can mean that the world each generation enters is different by 30 years. The view each generation holds about how we communicate changes – just look at the way the current generation use technology and send a message within seconds and in just 140 characters.

With the average age of a family business CEO being 60 you can see that they might not necessary share the same view of communication. Add to this an increase in the number of blended family members working together through second marriages, step children, adoption and so on – again putting a few potential elephants in the room.

55% of those in and around family businesses would rather stay silent than possibly upset their kin. Poor communication isn’t always because of a fall out – but rather to avoid one. 21% of family business leaders (particularly the founding generation) will make decisions without discussion or consultation. 74% admit to communication being strained. Silence allows interpretation, assumptions and guesswork to creep in – and that hardly ever ends well.

We also have to understand that we all have a preferential style of communication – some of us are thinkers, some are more factual and others emotional. Because of both the complexity and importance of communication within family and owner managed enterprises, and knowing the risks presented by poor communication, we have partnered with the Shirlaws Group to offer readers of our 2015-2016 Annual Guide access to a complimentary online indicator to explore your own style – and that of your family and board members.

By looking at the team as a whole you can begin to develop and adapt approaches for far greater impact.

View our annual guides within resources

Can’t be clear enough

I was fortunate enough to spend time with a friend and business associate this week as he shared the story of selling his business and how he recently signed the deal and announced to a work force that the deal was done. This wasn’t a family business but I was struck by his journey and absolute clarity from the day he and his 2 partners formed the business.

Day one for them was spent shaping what each of them wanted in the future, so much so that they each created a visual montage of their future life once they’d sold the business – the business that really hadn’t even started yet. From cars to holidays and how time would be spent with family once a deal was completed in the future. Each of them had their picture of the future on the wall by their desk.

They also set out with a spreadsheet to calculate each year what the sale value might be – but only once they had each worked out the minimum figure they’d take if an offer was made. Between the three they had agreed on one figure based on thsi and that became critical 15 years on as they negotiated the sale. They exceeed this figure just a couple of weeks ago as they sold their business to Ernst and Young.

If you can really see something with absolute clarity it makes achieving it much more likely!

The Life You Want

Over the festive season we travelled to Anglesey in North Wales to visit with my parents in law for a couple of days. This was our first visit to them in their new home – having grown up, lived and worked all their lives in the West Midlands. Ever since I met them, I’ve been aware of their aim to retire to a ‘view by the sea’ as soon as they were able. Having brought up their 4 children, 2014 was to be the year for this huge move.

My mother-in-law retired in April and set to work making sure that the house that had been the family home for 35 years would be saleable. In parallel to this she arranged numerous trips to Anglesey to view perspective homes and rental properties. The plan was fully underway. In early Autumn 2014, the house sold and a rental property was in place. Their children said farewell to their family home, one that has seen many happy times, some sad and lots of stories created.

What struck us all was the clarity of my parents-in-law’s vision. We felt that we could almost see what they had dreamt of for years. We knew this to be the case when we took the first visit in January. What we saw wasn’t just their vision brought to life but two people, and a dog, that looked different. They looked at ease, incredibly happy and ‘at home’. The pressures and demands of working incredibly hard and raising their family had gone. Not only did they sparkle but they were simply ‘different’ and in the very best possible way.

Our trip was inspiring and we have all been left realising that we need our own verison of their ‘view by the sea’ dream – and to make it happen as soon as possible.

What’s yours and what are you doing to make it happen? Try playing with GLAS and see what you discover