Free Training Session 5
Family Business Succession Consultant Pakistan
Succession Planning Family Business Pakistan
Understand your family business, its components, and all stakeholders and people who serve the family business. Make them align and draw their boundaries.
FBS Consultant: Family Business Succession Solutions
These solutions are almost like a magic bullet. To use them, you need to change your way of thinking. You will have to shift your old thinking and understanding mechanisms. The statistics show that 75% of businesses fail after the first generation transition, and success percentage decreases even more with subsequent generations.
Example:
In a business, a father and his son both manage the business full-time. The father is very strict, and the son often gets scolded for his mistakes. If the son were to grade his father
he would probably give him a B grade or even mark him negatively. However, if the son changes his thinking process and mechanism, he will realize that in the business, his father is not just his father but his boss with very high standards and unmatched expertise in their field. These high standards are what have brought the business to its current level. The son must learn to manage the business with these high standards in mind. So, instead of focusing on the scolding, he should focus on how he can improve his productivity within this system. He should consider how he can match his performance to these standards.
In this example, we have changed the father’s negative attitude into a professional challenge. Now, this situation challenges the son’s competency and enhances his ability to meet these standards. If the son was asked to grade the father again, the grading would be positive.
Our mistake is that we view family relationships and business relationships with the same perspective.
I am telling you that if you want to see your business succeed and keep your family satisfied and united, you need to change your thinking.
If we go through a complete process, our point of view regarding the family will become more professional. We will have a better understanding of why businesses fail due to internal conflicts rather than external factors.
The first step in the process is:
1) Alignment
Problem 1: Family Members Have Different Vision & Values, They Are Not Aligned
Solution:
Alignment guides you through a process of values clarification for yourself and your family. Such alignment is the very foundation of a values-based operation. The greater clarity you have about who you are as a person and what motivates you, the greater the impact on your ultimate success and happiness.
- Personal Alignment
- Values – Ethics
- Your Vision as a Leader
- Alignment in the Family
Conducting an Aligned Family Business Meeting
It is necessary that our family members are completely aligned.
In this process, you need to make your family members list down their values. Some may value mutual love, while others may prioritize fulfilling God’s commandments. Identifying all these values is part of alignment activity.
You might value mutual respect or financial security, meaning ensuring continuous financial stability. This way, we get a list that describes the family and the business.
After compiling everyone’s list, create a mission statement. The mission statement can include statements like, “Family members will work in our business.” Sentences from the above list will help in developing the mission statement.
Next, using a characteristics placing worksheet, think about the characters or behaviors listed and draft rules against them so that these characteristics or behaviors come into measurable form. For example, if our family values being prayerful, then the behavior can be measured by ensuring five daily prayers.
Set behavior goals that can help achieve our mission.
Alignment includes values and ethical behavior. When we are all aligned in one direction, we can then work on setting boundaries.
2) Boundaries
These boundaries will naturally evolve after learning the critical lesson of family alignment. Boundaries support and serve the development of the family business and help determine the clarity of processes, the structure of authority, and role definitions.
In this process, we will define everyone’s roles, their responsibilities, and how they will be accountable for these roles and responsibilities. We need to define our boundaries.
- Boundaries of the Immediate Family
- Job descriptions
- Roles and responsibilities
- Authority and Accountability
Once roles are defined, we will know who will do what and what they won’t do. These are the boundaries. Boundaries will change as the demands of our work change, as our roles change, and as we develop personally.
We need to create boundaries during business operations and work within them.
It might seem difficult, but making money easily isn’t possible, and protecting relationships isn’t easy either. You have to work for it.
3) Communication
How to Raise the Voice Correctly?
Launch family meetings and a family council for this purpose.
In family meetings, people who work in the business and those who have the potential and interest in joining the business can participate. These meetings should be serious, and the agenda should be shared with all attendees beforehand. There should be an open discussion regarding the agenda, ensuring everyone is heard properly.
The family council is a broader family gathering, held monthly, or once a quarter or twice a year, where business success stories are presented, and the overall business values, mission, and vision are shared. This is a higher-level communication where we don’t go into minute details of each aspect. Allow everyone to share their point of view in the meeting.
4) Competency
People of all ages become motivated when their efforts are recognized, when they are asked to give their input, and when they do things that interest them. But if you give a job to a non-competent person in your business, they will not receive positive recognition. No one will praise their work, and obviously, their input will not be valued. This non-competent person will have no identity in the business, and no one will appreciate their contributions.
As a result, they will be demotivated.
If a non-competent and demotivated person is in your business and is also your family member, you have a real problem.
Now you are stuck with a big problem: an unhappy employee who is also a family member, a part of your family. Never make the mistake of not setting criteria for family members entering the business.
It is better to tell someone that they cannot join the business than to bring them in and then have to remove them.
It is crucial to establish and implement good criteria; otherwise, a few people will end up running your business, while others will not be doing their jobs.
Let’s start by acknowledging that there is absolutely no guarantee that if you are a successful businessman, your children will also be brilliant.
Having brilliant children of a successful businessman is not guaranteed.
If your eldest son does not have the ability to manage the business, what will be the future of your business? If you choose a successor who ultimately proves to be ineffective, what will happen to your business?
Certainly, you will have to remove him from the business.
If a business is run by non-competent managers, it cannot sustain its success.
5) Acquiring Skill Set
Which Skills Are the Most Important? How to Acquire Required Skills Immediately?
You need to develop
- Skill development mechanism
- Next year game plan for acquiring important skills required in the family business
The skills that are important for your business might not be important for others. List all the things essential for our business, create a list of skills, and then separate the important skills from the less important ones. Develop a complete game plan to acquire these skills.
6) Retirement Reality
How to Retire from Family Business?
- Needs vs. expenses
- The difference between retirement for a business owner versus a non-business owner
- Determining where you stand in relation to your retirement needs
7) Family Constitution
How to develop my family business rules book?
A family constitution creates SOPs (Standard Operating Procedures) for our family matters and business affairs, providing a framework for the smooth running of both. It involves all family members and establishes general rules or principles.
It includes policies on the education of the younger generation and outlines how new generations can be employed in the business.
Watch training session 4 for more details
8) Protect Your Business
How to Protect the Family Business?
Review the assumptions and mistakes that owners make and introduce an easy-to-follow way to ensure that your business operations can continue even if there are unplanned disruptions.
Understand why businesses fail and how we can prevent them from failing.
9) Passing the Business to Someone in The Family
How to Pass the Business?
- Identifying roadblocks in your approach to evaluating potential successors and selecting the right team of professionals.
- Drafting your succession plan and funding a succession.
How to set your business up for a smooth transition to someone in your family?
10) Everything you need to know to prepare your business for sale
If You Could Not Find Your Successor Then How to Sell the Business?
- Highlight the considerations that you should have in mind.
- How long in advance should you start preparing?
- What buyers look for and places to sell your business.
Helps you set your business up for sale at its fair market price or higher!
11) Successor Mindset Training
Retiring generation & upcoming generation brought up differently, their everyday routine is different: thinking is different; how to balance it?
12) Implementation (1-Year Game Plan)
How to Take Steps & Keep Things Rolling?