Strategies to secure a smooth succession plan

Many of the world’s leading firms started out as small family businesses many years ago.

Some of these companies are over 200 years old and have lasted through many generations.

What sets these businesses apart is that there’s continuity which is ensured through very well executed strategies.

These strategies cover issues such as conflict management, succession and exit planning, change management, corporate governance issues and dispute resolution.

Family businesses are unique in that the relationship between the partners is permanent and very personal.

For example, how do you effectively manage a business owned by a husband and a wife if they decide to divorce?

The two greatest threats to continuity in a family business are poor conflict management and succession.

In Kenya many large manufacturing outfits and factories owned by Asians were started in pre-colonial times by a single entrepreneur.

The succession strategy for such a business was fairly simple, the closest relatives of the entrepreneur were trained to carry out the same business and then took over management of the day-to-day affairs of the company.

The second generation managers handed down the running of the business to the third generation and the cycle would continue.

Most of these businesses are currently at their fourth generation.

Some of the simplest tasks in succession planning include transfer of shareholding in companies to beneficiaries who are also family members and nominations into partnership.

However, how does the transfer ensure that the business is run according to set values and procedures?

Training is one of the ways to ensure that the standard is maintained. Another way is to ensure that there is good governance at all times.

Some family businesses hire external managers to run them while the family retains ownership.