The playwright George Bernard Shaw said, “The single biggest problem in communication is the illusion that it has taken place.” Statistics from family businesses in transition certainly agree. The Family Business Institute cites a 2005 Canadian Federation of Independent Business survey that found that “…while 74% of the senior generation leaders report there is a clearly communicated succession plan, 78% of their successors report there isn’t!”
Based on the work my team and I have done with numerous owners to craft transitions for their businesses — many of them multi-generational businesses — I’ve created a list of five tips designed to replace the communication illusion with meaningful and productive dialogue.
1. Do your homework
Few owners are prepared for conversations with potential successors. They haven’t identified their most important transition objectives or the ones they will not sacrifice. They haven’t compared how well various transition strategies meet their objectives. Owners who do their homework can confidently share what they do and don’t know and paint a clear picture of the future, so their successors know what’s in it for them.
2. Consider the audience
Owners realize that any mention of a future transition raises questions and typically creates anxiety. Spouses, families, partners, employees and even customers can have strong opinions that can quickly escalate into assumptions, confusion, disengagement and/or conflict. The parent/child dynamic is especially sensitive, so owners should consider recruiting an objective third party to help communicate effectively.
3. Go fishing
When you first begin to create your succession plan, go fishing. Rather than try to paint a picture of a fuzzy future, try to understand what possible successors are thinking. An owner who is fishing says something like, “I’ve been thinking lately about my future and that of the company. I’m interested in hearing what direction you see the company going as I get older.”
4. Don’t sell, ask
If you can consider transitioning your business to a successor, you’ve created a successful business. Stepping into your shoes is the opportunity of a lifetime — if that’s your successor’s dream. Ownership isn’t for everyone. You do yourself and your business a huge favor when you create a thoughtful transition plan and then ask possible successors if they truly want to become owners.
5. The hard stuff really does make you stronger
Some conversations about transitions can go as badly as you expect they will. However, even the most difficult conversations yield critical information that can validate or destroy your assumptions. Either way, you come away from the tough conversations with a clearer view of the road ahead.
If you are stalled on your business transition journey because you expect that some conversations could threaten one or more of your important relationships, consider these five tips designed to protect them.
Elizabeth Ledoux is a co-author of the award-winning It’s A Journey: The MUST-HAVE Roadmap to Successful Succession Planning, as well as Accelerate Your Entrepreneurial Flight and Understanding the Growth of the Entrepreneur. She frequently speaks to organizations and business owners about challenges and opportunities in private and family business transitions, business and individual growth, and the business succession journey.
This article originally appeared on The Denver Business Journal website.