By Gwen Green (gagreen@ualr.edu)
June 1, 2010
LITTLE ROCK, Ark. - Small businesses are often family affairs, involving parents, siblings, and children working together. Very few family-owned small businesses adequately plan and prepare for succession of ownership and management, however. Studies show that tension over succession exists in a majority of family businesses.
"Family Business Management," a book by A. Bakr Ibrahim and William H. Ellis,
offers these guidelines for effective succession planning:
" Include the younger generation early in the business and mentor and train them
for future leadership.
" Also include them in forming the company's mission, vision, and strategy.
" Plan for a gradual transition, possibly taking up to five years to shift power
to the successor(s).
" Give thought to the next generation's life stages, ages, needs, and careers.
" Encourage family members as well as people beyond the family to contribute
and participate in the succession plan.
Without a succession plan, disputes are likely to arise that can damage the business and create lasting rifts in family relationships, particularly if several family members emerge as potential successors. As the Business Owner's Toolkit points out, a family business must deal with anything that influences the family itself, including family members' health status, marital status, skill levels, and participation levels, in addition to the issues that face all businesses, such as economic trends, competition, and regulations.
To discuss succession planning or other family business issues, contact your local ASBTDC. ASBTDC consulting services are confidential, personalized, and free.
The ASBTDC is a partnership of the U.S. Small Business Administration and the UALR College of Business. Through a statewide network of seven offices, ASBTDC assists start-ups, existing businesses, expanding businesses and technology businesses.
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