It is well established that an agile business is more likely to be a successful one. Agility is associated with leadership, quick and effective problem-solving, technology and innovation. But our research has indicated that decision making ability is now the number one determining factor for an agile business.
That is why the decision making strategy for a family business is central to succession planning. It can take years, and some considerable thought, for a family business to work out how it will survive through the generations. Many family businesses are applauded for their values and strategic longevity. But they can be vulnerable when the decision makers are no longer around. The sudden death of an integral owner or manager can place a well run and successful business into crisis overnight unless there is a clear framework for decision making and succession.
Agility is not just about planning for the unknown, it is also about planning for the predictable. The more family businesses plan for their succession, the more agile they will be and the greater decision making ability they will have during times of significant change. This is not just about writing a Will or transferring wealth, it can be as much about family and corporate governance as well. Successful family and entrepreneurial businesses need to plan to be agile.
It is never a one size fits all approach but if you are an owner of your business some or all of these planning tools are worth thinking about:
- Work out who needs to run the business in your absence and who needs to own it. Are they different? How are you incentivising the right people?
- Ensure the value in your business can be inherited by your loved ones. Put in place the right Will and other succession arrangements. Take advantage of inheritance tax reliefs if they are available.
- Do you want your family to carry on the business, are they invested into this? Could you put your family aims and intentions down on paper to manage expectations?
- Have you got the right choice of directors around you – what is the plan if you're not here or can't make decisions. You can put in place a lasting power of attorney that relates solely to business ownership decisions.