(Editor's Note: This is the eighth in a series of columns by family business leaders and advisors with information and ideas about topics unique to family businesses, developed in conjunction with the Conway Center for Family Business.)
By Jerry Bordner
Business advisory groups comprised of individuals from similar industries or performing similar roles have become useful tools for business leaders. Family business presidents and CEOs are no exception. The objective of the Conway Center for Family Business CEO Peer group, which I facilitate, is to provide a forum that allows the leaders of family-owned companies to get together to discuss common problems. The group began by creating an atmosphere of trust and camaraderie between participants to allow frank and open discussions. Monthly meetings are divided into two segments: a business portion conducted by a selected presenter and a social segment where personal challenges and issues are discussed over dinner.
The transfer of ownership is always a hot subject with family-owned businesses; whether it is from the first generation (company founder) or when future ownership transfers over time. The more difficult succession transition is the first generation to second, mainly due to the company founder's reluctance to give up control over something he or she created. In many cases the thought of succession planning is of out of their realm and overwhelming, so they tend to procrastinate. One of the stumbling blocks is selecting the right successor. In some cases it's clear but with families comprised of siblings, their children and their spouses the decision becomes mind boggling.
Wealth protection, especially if personal assets are tied up in the company, and wage continuation are also subjects to be considered and can prolong the agonizing process. Being able to openly discuss the successes and failures that others have experienced provides an excellent sounding board.
Being the most senior of our group I am the only one that has gone through the entire succession process and today have very little involvement in the company. After I retired, it became clear to me that the longer I was away from the company the less I knew about daily operations and the less inclined I became to render opinions, which weren't always wanted anyway. This is part of the process of letting go which, I might add, is tough.
Our group represents a good cross-section of companies undergoing the succession process. One company founder, who is driving the succession transition, has the blue print of hisplan pretty much complete and ready to be implemented; although fully executing the plan still causes him to have some sleepless nights. Others in the group will be the successors, are running the company, and are in a situation of coaxing, pleading and influencing the current owners to get on with the succession planning process. This can be difficult because of the respect and reverence they have for their parents who are faced with letting go (this isn't isolated to the first to second generation transition). The process can be more complicated if the channels of communications are weak or nonexistent. I know of one company outside of our group that is run by the son of the owner who is 85. When the son approaches his dad about succession his dad tells him that "everything is taken care of" but the son has yet to find out what that means. This is extreme, but it happens.
Although succession planning can be a daunting process, it is a critical step to ensuring the future of your family business. Talk to other family business leaders, seek the advice of experts, but most importantly open the lines of communication with your family to start making plans that will meet the needs of both those exiting and continuing your family business legacy.
Jerry Bordner leads the Conway Center for Family Business CEO Peer Group, facilitating valuable discussions that focus on business, family and personal leadership issues in a confidential environment that allows members to share their experiences and advice. Jerry started Bordner & Associates as a plastics molding manufacturers sales agency in 1982. His technical creativity fostered many innovations and led to the inception of Laser Reproductions in 1994 to produce three-dimensional prototypes from computer designs. Today, Laser Reproductions is run by two of his sons, Paul and Bret Bordner.