There are several different approaches to developing and implementing a succession plan for a business. Some take a practical, deliberate approach, starting with a basic estate plan and continuing to build on that plan as the business grows and future preferences become clearer. Others use their tried-and-true procrastination approach, choosing to let it go until the elder generation is nearly forced to develop a plan because the next generation is in the prime of their productive life and insists that if they are going to continue laboring in the family business, they need to know what the fruits of their labor will produce for their personal future. This is not selfish behavior on their part. They are logically determining if continuing to work in the family business, without knowing how the elder generation plans to divide the estate and if the business will continue at the end of the current owner’s life, is the best future for their personal career and family.

Crucial Conversations

Hope is not a strategy. Lacking a plan is a guaranteed way to invite disaster for the future of the business and every person involved after the elder generation passes. If the elder generation is reluctant to have the conversations crucial to developing their strategy, they need someone to help them identify the reasons for their resistance. There are many potential causes for this reluctance. The ones that I most often encounter are:

An inability to talk about the end of their life.

Thinking that the provisions of their plan will be implemented immediately.

Believing they need to develop a plan that is equal for everyone.

Fear that their personal living expenses, especially their medical needs, will not be met if they don’t retain full control of the business.

If the family members have not been able to initiate these discussions, it’s probably time for a facilitator to help coax the elders to begin the process.

Three Key Elements

Regardless of whether you use the services of an attorney, an accountant, a strategic facilitator or someone from each profession, there are three key elements that must be included in a comprehensive succession plan. They include:

Wealth Management—This states the allocation of assets as the accumulated wealth transfers from one generation to the next. It is best done in an unemotional, disciplined, thoughtful manner that avoids the desire to provide the exact same amount to every heir, as well as the tendency to use assets to pay emotional debts. Tax strategies, the long-term healthcare needs of the elder generation, and the allocation of resources that ensures continuation of the business should be key priorities. There are many, many ways to ensure that the allocation of assets is fair, even though it may not be equal. The elder generation and other owners of assets are in control of this process and make the final allocation decisions. Elements of the final plan should be shared with those directly affected by the triggering of the wealth management plan so they can make appropriate decisions for their future.

Business Continuity—The business needs a clear plan for how it will continue if there is an untimely loss, either temporary or permanent, of one of the key people in the organization. This plan identifies who will take over each area and provides a strategy for how the backup person will be cross trained to do those tasks and perform that role so the transition can be as seamless as possible. This strategy is woven into the wealth management plan so when major transitions in ownership occur, there is also a continuity of the business that maintains its performance into the next generation.

Leadership Transition—This element defines how the current generation of leadership transfers their wisdom and knowledge to the next generation. Where the business continuity plan focuses on day-to-day operations, leadership transition focuses on who will have the authority and control. Strategies include identifying the traits for future leaders in our company and who those leaders might be, providing training in those traits and creating opportunities for those skills to be developed.

Your Strategy

Developing your succession plan requires a series of deliberate and essential discussions that start with the elder generation and eventually include members of the next generation in areas where they are directly affected. The best plans are typically developed over a 3-to-5-year period, and at least 10 years before the first major wealth or leadership transition occurs.

For Management and Executive Coaching, as a conference speaker or help with your employee and family business challenges, Don can be reached at, or by calling 765-490-0353.