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Long-Term Planning for Family Businesses

Author:
Kat McKenzie
Marketing Manager
Holocentric

LinkedIn Profile

After a bit of desktop research, I come across a fact that one of the oldest independent family businesses in the world is Höshi Ryokan, a hotel owned and managed by the Japanese family for almost 1300 years - that's 46 generations! When I read about successes like this, I can't help think of Simba from Disney's The Lion King, and the lessons that passed on from his father, but also all the troubles he ran into having to discovering his own path and ways to rule the kingdom when ... life happens.  

So, here I thought I'd jot down some tips for long-term planning that may be helpful for your family business, as well as highlight some hefty roadblocks that may appear along the way. 

Family Assets

We know this is unique to every family business so identifying what your comparative advantage is or what potential roadblocks is key. Some discussion areas:

  1. Family name and brand – is there an important history associated and how is this preserved?
  2. Values – are they embedded in the way you run your family business? Is it important to continue?
  3. Business Type – is your business structure sound, has adequate control and power over strategic decision-making etc.
  4. Asset Transfers – is there a plan in place and how often is it reviewed or kept up-to-date?
  5. Ownership with each person’s interest – is there a share in rewards and interest in improved business performance both on an individual and collective basis?
Family Roles and Responsibilities

When you’re passing on the baton in a relay race, three metaphorical points to discuss amongst your business:

  1. How do you prepare the person who is holding the baton?
  2. What’s the selection process for taking the baton? Who should take on those news duties?
  3. How will it work? Is there a handoff process? How long will it take? What’s the onboarding process?

Does your family business have a central repository that houses all these processes and maps them out? What does the onboarding process look like? Are documents, roles, responsibilities, policies, and procedures easily accessible and understood by all involved?

This is key to successful knowledge transfer and delivering a successful continuity plan.


Family Talent and Capabilities

Like the point above, long-term success planning is more than selecting the next person who will take over running the family business. It may be time to review all leadership roles and begin thinking about the roles for the next generation.

  • How can you create pathways to leadership roles?
  • Are there any opportunities among employees to collaborate and learn?
  • What training and develop opportunities are there to pass on this critical knowledge?

It is absolutely recognised that highly sensitive subjects will need to be discussed and conversations may feel uncomfortable at times. To make a thoughtful transfer of your family business, there are actions taken by each generation to shape the family and business and decades.

Don’t delay planning any further and put measures in place to protect your family business for the long run.

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