Succession planning is key to legacy of family owned businesses
Effective succession planning is the key variable in building and preserving a family-owned business legacy, a planning expert told more than 100 Delawareans at an event May 10 at the Wilmington Christiana Hilton. The event was presented by the Delaware Business Times, the Small Business Development Center (SBDC) of Delaware and the Creative Financial Group.
“Particularly important is separating the issues around succession in ownership and succession in management,” said Mike McGrann, managing principal in Telos, a succession planning consultancy. “It’s a matter of fairness, and everyone has a different idea of what is fair. As a result, it’s about engaging the conversation in succession planning.
As a business grows and moves into successive generations, it’s important to think of business leadership in three components, said McGrann, including shareholders, the business board and its management.
“Succession is about moving from intuitive to intentional,” he said, citing important variables among prospective successors, including knowledge of the business and the industry; experience listed on the resume; skills in communications, negotiation, analysis and motivation; relationships with important business stakeholders like customers, suppliers and bankers; reputation; and vision.
“The vision thing is just essential, and it does not have to be the vision of the out-going generation. But it’s just so important that the successor have a vision about where the business can and should be going, and be able to communicate that in an “˜elevator speech’,” McGrann said.
The engagement and discussion process is critical to that, McGrann said, because it’s essential to eliminate ambiguity in succession. “Where there’s ambiguity, there’s conflict,” he said. That calls for shared understandings around leadership, profitability, intuitive business planning, and roles of entrance by family to the business.
Completing the program was a panel of three family business owners who shared their experiences in succession planning.The group included Andy Strine, president of investors Realty; Cianmarco Martuscelli, owner of the Martuscelli Restaurant Group; and Anthony Wright, managing partner and CEO of the Green Line Business Group.