Lisë Stewart founded Galliard Group to support family-owned businesses in the many decisions that can make or break the future of a company. One significant area of decision-making for family-owned businesses is succession planning.
When considering how to handle the future of the company, many family-owned businesses don’t realize the number of options that are available. From transitioning to the next generation in the family, to bringing in a leader from the outside or deciding to sell the business, the decisions are very personal and require careful thought and planning.
That is where Stewart, founder of Galliard Group, lends a helping hand. Galliard Group provides consulting, training and support materials for family-owned businesses. Conversations in the succession planning process can be difficult, as most experienced family-owned business members will report. The process is challenging on several different levels.
“Owners who are currently running the business often really enjoy what it is they are doing and don’t necessarily want to leave, but they feel like they need to make room for the next generation of ownership,” Stewart says. “Others really want to get out of the business because they’re tired and they’ve been doing this a long time, but they realize they’ve never groomed a successor and they don’t know what to do with the business.
“Sometimes they think that their children may want to take it over, but they’re concerned that their children don’t really have the skills, background, or maybe the passion to do a great job. How do you tell your children that? So it’s a very difficult situation.”
These businesses need to understand their options. The sooner the business members start the planning process, the better.
“We try to convince our business owners to develop their exit strategy right when they start the business,” Stewart says. “Think about what the future needs to be and what your plans are. A lot of people don’t realize that it could take five years or more to really develop and implement a successful succession plan.
“The other thing I think is important to note is that succession is not just about finding one person to take over and run your business. A succession plan is a plan to continue the long-term viability and success of the business. That often means that you need far more than one person to take over — you need a strong leadership team.”
More often than not, family-owned businesses will have to look outside the family to get the right kind of talent to help grow the company.
“We really encourage family-owned businesses to place people into jobs based on their talent and skill, not on their blood line,” Stewart says. “You have to look at the job and what needs to be done to this company to meet a strategic goal. Get people into jobs that have the talent or the ability to learn skills that are key to that job being effective. Base your organizational development on key competencies as opposed to relationships.”
Family businesses often struggle to weigh the needs of the business with the needs of the family. It is important to be honest in discussions about the future, especially for families that do not plan to pass leadership to the next generation.
“We have a saying at Galliard Group, which is, ‘Deal with the emotional issues before emotions become the issue,’” she says. “If you believe your son or daughter or the next generation of potential owners don’t really have the skills … have a really honest conversation around what sort of skills you need in order to bring this strategic plan to life and if you don’t have it, what are the options.”
Depending on the needs and desires of the business owner(s), there are several paths to take.
“One might be that you form an advisory board of people who have knowledge necessary to help grow the company and they can serve as mentors and coaches for the next generation,” Stewart says. “The second thing you can do is bring in an interim leader. They come in in a leadership role, but they are hired with the knowledge that they’ve got to be able to coach the next generation of ownership. There really are quite a lot of options that family owners can generate if they are not sure that the right leader is in the family.”
How to reach: Galliard Group, (320) 762-1371 or www.galliardgroup.com