Once you have a handle on how best to approach the family
issues, the next level is to develop a succession plan that is not
only a good plan from a business standpoint, but also has a good
chance of being acceptable to family members who play a key role in
the business.
Meeting both goals (having a good plan that's also
acceptable to key family members) may at first appear contradictory
or even a waste of time. After all, you might say "If it's
a good business deal for Dad and Mom, then of course it's good
for the family and everyone will want to do it."
All I can say is, "Lotsa luck." Family businesses
(even the best ones) are never run strictly on a "dollars and
sense" basis.
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Just as every business has its own corporate culture that it
lives by (regardless of what its slick brochure or Web site may
indicate), every family business has a complex set of dos and
don'ts that have evolved over the years that must be reckoned
with in establishing a "saleable" succession plan.
For instance, here's a somewhat extreme but instructive
example of how an otherwise good succession plan would be DOA if
presented to your dad:
Let's say that four other family members also work in the
business. As can be the case in many family businesses, two of the
four are doing an OK job but make salaries and have perks that are
more than they're worth to the business. The other two have
been the problem children of the family who wouldn't otherwise
be employable outside of the family business.
A good succession plan would recognize that in order for the
business to be able to pay your dad for his fair share of the
business and to continue to survive and prosper, at least two
things would need to be done: First, the two problem children would
have to be removed from the company over time. Second, the salaries
and perks of the other two family members would have to be brought
back to reality.
While that succession plan may get you an A in an MBA class, in
real life, your father is not going to appreciate it.
Your dad consciously or unconsciously made the decision a long
time ago to take care of those four family members by allowing them
to work in and be handsomely paid by the family business,
regardless of their fair market value. Your dad may not see your
succession plan as a good idea. Rather, he may see it as both an
accusation of having wasted company funds all those years and as a
serious challenge to his self-defined role as protector of
otherwise economically vulnerable family members.
To have a "saleable" succession plan in this case, you
may have to factor in the cost of continuing the employment of the
other four family members, while privately showing your dad how
this extra cost will impact the amount that your dad can receive
for his fair share of the business. The key to selling this type of
succession plan may be to let your dad decide whether or not he
wants to take less money for his fair share of the business in
order to continue to support the other family members after
he's gone.
In any event, keep in mind that a good or even great succession
plan that violates the unwritten rules of the family business is
unlikely to be accepted by the family and can even be
counterproductive to any future discussions about that dreaded R
word.
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