Loyd Rawls

What are the Critical Issues Impacting Succession? (Part I)
July 20, 2007

Business Succession Planning is generally an overwhelming problem, especially when family emotions begin to liven up the business dynamics. However, the conundrum of family business succession can be converted to workable issues by examining succession through the Succession Matrix_sm. In order for you to effectively pass your business to and through the next generation, it is important to understand the critical issues and how it may impact your succession planning. 

1. Business Owner Motivation and Perspective sets the baseline for the willingness of family members, managers, employees and customers to go the extra mile to promote and facilitate the perpetuation of a business. There are two critical questions:

Is the owner viewed as the servant or being served by family, employees and vendors?

Is the owner willing to sacrifice for the achievement of succession?   

2. Personal Financial Planning assures that business owners develop sufficient wealth independent of the business to empower independence from the business. Being financially independent allows business owners to exit the business and coach their successors as they learn from their mistakes. The continuity of business credit is also integral to the fulfillment of financial planning. Personal financial planning also establishes and coordinates the wills, trusts, asset transfers and liquidity that are critical to the succession of a business through an estate.  

3. Business Structuring assures that the appropriate corporations, partnerships, contracts, etc. are positioned to support and fulfill the various aspects of the succession strategy. Issues of business structuring include but are not limited to governance, cash flow, liability protection, management control, etc.

4. Business Performance is a critical aspect to the Succession Matrix_sm because business succession is dependent upon business success. The satisfaction of the fundamental performance expectations of shareholders, vendors, creditors and franchisees confirm that the business is an asset worthy of the ongoing support and enthusiasm of all who have a vested interest in continuing business operations through the next generation. 

5. Strategic Planning provides vital vision for the fulfillment of a succession strategy. A strategic succession plan generates the detailed long term update action agendas needed for implementation of the structures, processes and people that are critical to the fulfillment of succession plans. 

Next topic – The Remaining 5 critical factors of the Succession Matrix_sm

Posted by Loyd Rawls on July 20, 2007 | Comments (0)