HOW TO PLAN FOR SUCCESSION
The following is an exerpt from How to Plan for Succession, a manual produced by Commercial Carrier University and sponsored by Castrol. CCU is an educational program produced by Commercial Carrier Journal that includes business management manuals, seminars aimed at improving management skills and a Website. For more information, visit www.commercialcarrieruniversity.com.
Succession at a family-owned business usually means transferring ownership and management to a family member. Transition to a family member raises unique management, legal and financing issues. This chapter focuses on the management issues.
Will it work?
The worst thing you should do is assume that your child or other family member will take over just because he is a family member. Answer these questions honestly:
Does the family member have the passion for the business? If a son or daughter has never expressed an interest in the business before you raised the issue, it’s difficult to imagine him or her as an acceptable successor.
Is the family member’s motivation appropriate? If your son is only really interested in the money and perks that go with owning and managing the business, consider whether his attitude is right for the job.
Can the family member make a contribution that will help the company endure through the next generation? If not, then you may be doing your son a disservice by putting him in a position where he will not succeed, and you could jeopardize his own personal wellbeing as well as those of the employees. Make sure the family member has the skills the company needs.
Does the family member meet minimum requirements? The scope of your operation determines what knowledge and experience a successor absolutely needs. At 25 trucks, perhaps a couple of years in operations and a great rapport with drivers will get him through. But running a 750-truck carrier likely requires at minimum several years experience as the chief executive of a mid-sized operation or perhaps a slightly lower position at a larger carrier.
Do you feel obligated to keep the business in the family? If your only motivation for transferring the business to a family member is that you feel that everyone expects you to do so, then you have a problem. You obviously haven’t identified a suitable candidate yet, and perhaps there isn’t one. In the end, you aren’t doing your family or your employees any favors by handing the business to someone who can’t handle it.
Transition at a family-owned business to another family member raises unique management, legal and financing issues.
For now, we will assume that you have answered these questions and are still confident that a particular family member could replace you. There still are a number of issues to work through.
Dealing with rocky relations
Because you likely are the family’s leader – or one of them – it may not matter much to you that family members don’t get along. But for the next generation, it may be a serious problem. If you already have family members in key positions within the company, consider whether your chosen successor, or any family member, can gain the confidence and loyalty of the others.
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