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Family Business Succession Planning: We are our own worst enemies

Jeff Haltrecht
Jeff Haltrecht

The document discusses succession planning for family businesses. It notes that only 30% of family businesses succeed to the second generation due to a lack of planning. The author advocates for separating family issues from business problems, beginning succession planning with a clear long-term vision, and identifying obstacles to that vision. The document provides a 9-step process for successful succession planning, including crafting strategies, restructuring ownership and management, defining roles, compensating family members fairly, and transitioning leadership over 3 to 7 years.

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Copyright Jeff Haltrecht | family business advisor 2011 Family Business Succession Planning: We are our own worst enemies
Every Business Must Be Sold Either Internally Or Externally Gifting the business to your children is a Copyright Jeff Haltrecht | family business advisor 2011 recipe for wealth destruction 2
How Old Are Old People? Old is someone 15 years your senior No matter your age, you still feel young... Copyright Jeff Haltrecht | family business advisor 2011 And your not ready to stop doing! 3
Could We Say The Same For Succession Planning? Succession planning? That is something I will think about when I get older. Still lots of time Copyright Jeff Haltrecht | family business advisor 2011 My kids arent ready yet Going to work until I die 4
Some Of Us May Be Thinking... What would I do with my time if I wasnt building this company? Copyright Jeff Haltrecht | family business advisor 2011 Will my children do the work the way I do the work? 5
30% 6 Copyright Jeff Haltrecht | family business advisor 2011
Why Do Only 30% Of Family Business Succeed At The Second Generation? Poor training Lack of common vision Parent does not hand over de-facto control Copyright Jeff Haltrecht | family business advisor 2011 Compensation program Business is gifted vs. earned 7
Are We Avoiding The Difficult Questions? Taking the time to plan the transition means having the dif鍖cult conversations: Who will lead? Copyright Jeff Haltrecht | family business advisor 2011 When will it happen? How to compensate? What gets transitioned? Who has defacto control? 8
Would You Gift The Stock Portfolio? Look at the business as a wealth building investment that Copyright Jeff Haltrecht | family business advisor 2011 provides an ROI... If this was the view, would you gift it? 9
You Have A Choice: Voluntary Or Involuntary Transition Our role is to replace Choice! ourself at the point we stop adding value to Transition or Sell the organization Copyright Jeff Haltrecht | family business advisor 2011 Think of yourself as the business steward, instead of its founder 10
Family Business Succession Planning In 9 Successful Steps 1 Separate 2 Begin with 3 Identify the people from end in mind obstacles problems 6 Determine roles, 5 Rebuild 4 Craft strategies accountability, structure on to overcome Copyright Jeff Haltrecht | family business advisor 2011 responsibility paper obstacles 7 Compensate 8 Transition over 9 Three tools family at market 3 to 7 years every family value deploys 11
Separate The People Step From The Problem 1 Emotional Centre Empathy Support Wealth Centre Ownership Family Stewardship Fair and Equitable Copyright Jeff Haltrecht | family business advisor 2011 Management Wealth Engine Opportunity Competition Source: The SuccessCare Program 12
Begin With Step The End In Mind 2 What will the business look like in 7 years? customers Copyright Jeff Haltrecht | family business advisor 2011 markets products Source: The Success Care Program size structure people 13
Identify Step The Obstacles 3 What are the obstacles preventing the business from achieving the vision? Leadership skills? Copyright Jeff Haltrecht | family business advisor 2011 Resources (time, people, capital)? Productivity? Ownership structure? Output capacity? 14
Craft The Strategies That Will Step Overcome The Obstacles 4 What are the 4 to 6 initiatives required to move things forward? Copyright Jeff Haltrecht | family business advisor 2011 15
Rebuild The Preferred Step Structure On Paper 5 How does both the ownership and management structures need to evolve? Copyright Jeff Haltrecht | family business advisor 2011 16
Determining Roles, Step 6 Accountability And Responsibility Dad/ Mom Put people in roles that allow them to play to their Mary strengths, while developing future leaders Ken Give them freedom within Copyright Jeff Haltrecht | family business advisor 2011 a framework Reward their efforts 17
Compensate Family Members Step At Market Value For Their Work 7 Give them the opportunity to buy into the company over time using their own earnings Copyright Jeff Haltrecht | family business advisor 2011 Provide a bonus for delivering at the high end of their target 18
To Fully Transition A Business, Step Plan On 3 To 7 Years 8 Cold Turkey Slow And Painful Management by successor Management Management by founder by successor Management by founder On again, off again Interim Solution Management by successor Copyright Jeff Haltrecht | family business advisor 2011 Management by non-family CEO Management by founder Progressive Management by successor Management by founder Source: The SuccessCare Program 19
3 Tools Every Family Step Should Deploy 9 Owners Council Family Charter Family Foundation Copyright Jeff Haltrecht | family business advisor 2011 20
Will They Do The Work The Way You Do The Work? No But make no mistake: they will work as hard. Copyright Jeff Haltrecht | family business advisor 2011 Just in a different way that plays to their strengths and vision 21
What About De-facto Control? Yes, you must give this up too! Copyright Jeff Haltrecht | family business advisor 2011 Let them lead 22
Gifting The Business To Your Children Is A Recipe For Wealth Destruction Give your adult child a large enough sum of money and ask them where they would invest it. If they say in the business, you know an internal transition is possible Copyright Jeff Haltrecht | family business advisor 2011 If they say no thanks, sell the business outside 23
Monetize The Value Created, While Shaping New Realities Starting fresh never felt so Copyright Jeff Haltrecht | family business advisor 2011 good! 24
Lead With Your Entrepreneurial Spirit While Accessing Breakthrough Solutions the A bout r! a utho I believe being a trusted advisor involves listening 鍖rst. The more I seek to understand your business and what you are dealing with, the richer the dialogue becomes. I have a friendly and engaging work style that is balanced between asking questions, challenging, and Copyright Jeff Haltrecht | family business advisor 2011 providing solutions for you to consider. What I dont do is make decisions for you. Our conversations are designed to stretch your thinking, for me to be a sounding board, and most importantly, a Jeff Haltrecht | family business advisor catalyst for you and your companys growth. 25
Treating You With Respect, While Challenging For Better Performance the A bout r! o auth Strategic Thinking When applied correctly, values guide behaviour Dev and set the tone for interaction between Lea opment Mod ness eling people. Here is what you can expect when we el ders work together: i Exceptional Bus hip Experience Treating you with respect Copyright Jeff Haltrecht | family business advisor 2011 n M ar atio ke Challenging for better performance ov tin g Inn Helping you be internally driven Jeff Haltrecht | family business advisor Putting ideas to action Embracing change as the path to opportunity Communicating candidly Delivering results 26
A Safe And Private Place To Have A Proactive Discussion s Pro duct Helping small to mid size business Strategic Business Plan owners maximize wealth within Build your business with powerful yet simple the company so that when you choose strategies that add to company wealth to sell or transition sometime in the Business Growth Advisor future, the business is valued at the highest Working one-on-one, we take a solid look at price possible. your strategic plan, leadership style, and Copyright Jeff Haltrecht | family business advisor 2011 management productivity, all with the intent of helping you maximize value within the company Succession Planning Effective solutions for realizing business wealth - so that the day you choose to transition or sell - the company gets the highest price possible 27
Have A Terrific Day! Contact Information Building Company WealthTM WEB & BLOG TWITTER LINKEDIN Copyright Jeff Haltrecht | family business advisor 2011 EMAIL PHONE - 905.601.0311 OFFICE - Oakville, Ontario, Canada 28

More Related Content

Family Business Succession Planning: We are our own worst enemies

  • 1. Copyright Jeff Haltrecht | family business advisor 2011 Family Business Succession Planning: We are our own worst enemies
  • 2. Every Business Must Be Sold Either Internally Or Externally Gifting the business to your children is a Copyright Jeff Haltrecht | family business advisor 2011 recipe for wealth destruction 2
  • 3. How Old Are Old People? Old is someone 15 years your senior No matter your age, you still feel young... Copyright Jeff Haltrecht | family business advisor 2011 And your not ready to stop doing! 3
  • 4. Could We Say The Same For Succession Planning? Succession planning? That is something I will think about when I get older. Still lots of time Copyright Jeff Haltrecht | family business advisor 2011 My kids arent ready yet Going to work until I die 4
  • 5. Some Of Us May Be Thinking... What would I do with my time if I wasnt building this company? Copyright Jeff Haltrecht | family business advisor 2011 Will my children do the work the way I do the work? 5
  • 6. 30% 6 Copyright Jeff Haltrecht | family business advisor 2011
  • 7. Why Do Only 30% Of Family Business Succeed At The Second Generation? Poor training Lack of common vision Parent does not hand over de-facto control Copyright Jeff Haltrecht | family business advisor 2011 Compensation program Business is gifted vs. earned 7
  • 8. Are We Avoiding The Difficult Questions? Taking the time to plan the transition means having the dif鍖cult conversations: Who will lead? Copyright Jeff Haltrecht | family business advisor 2011 When will it happen? How to compensate? What gets transitioned? Who has defacto control? 8
  • 9. Would You Gift The Stock Portfolio? Look at the business as a wealth building investment that Copyright Jeff Haltrecht | family business advisor 2011 provides an ROI... If this was the view, would you gift it? 9
  • 10. You Have A Choice: Voluntary Or Involuntary Transition Our role is to replace Choice! ourself at the point we stop adding value to Transition or Sell the organization Copyright Jeff Haltrecht | family business advisor 2011 Think of yourself as the business steward, instead of its founder 10
  • 11. Family Business Succession Planning In 9 Successful Steps 1 Separate 2 Begin with 3 Identify the people from end in mind obstacles problems 6 Determine roles, 5 Rebuild 4 Craft strategies accountability, structure on to overcome Copyright Jeff Haltrecht | family business advisor 2011 responsibility paper obstacles 7 Compensate 8 Transition over 9 Three tools family at market 3 to 7 years every family value deploys 11
  • 12. Separate The People Step From The Problem 1 Emotional Centre Empathy Support Wealth Centre Ownership Family Stewardship Fair and Equitable Copyright Jeff Haltrecht | family business advisor 2011 Management Wealth Engine Opportunity Competition Source: The SuccessCare Program 12
  • 13. Begin With Step The End In Mind 2 What will the business look like in 7 years? customers Copyright Jeff Haltrecht | family business advisor 2011 markets products Source: The Success Care Program size structure people 13
  • 14. Identify Step The Obstacles 3 What are the obstacles preventing the business from achieving the vision? Leadership skills? Copyright Jeff Haltrecht | family business advisor 2011 Resources (time, people, capital)? Productivity? Ownership structure? Output capacity? 14
  • 15. Craft The Strategies That Will Step Overcome The Obstacles 4 What are the 4 to 6 initiatives required to move things forward? Copyright Jeff Haltrecht | family business advisor 2011 15
  • 16. Rebuild The Preferred Step Structure On Paper 5 How does both the ownership and management structures need to evolve? Copyright Jeff Haltrecht | family business advisor 2011 16
  • 17. Determining Roles, Step 6 Accountability And Responsibility Dad/ Mom Put people in roles that allow them to play to their Mary strengths, while developing future leaders Ken Give them freedom within Copyright Jeff Haltrecht | family business advisor 2011 a framework Reward their efforts 17
  • 18. Compensate Family Members Step At Market Value For Their Work 7 Give them the opportunity to buy into the company over time using their own earnings Copyright Jeff Haltrecht | family business advisor 2011 Provide a bonus for delivering at the high end of their target 18
  • 19. To Fully Transition A Business, Step Plan On 3 To 7 Years 8 Cold Turkey Slow And Painful Management by successor Management Management by founder by successor Management by founder On again, off again Interim Solution Management by successor Copyright Jeff Haltrecht | family business advisor 2011 Management by non-family CEO Management by founder Progressive Management by successor Management by founder Source: The SuccessCare Program 19
  • 20. 3 Tools Every Family Step Should Deploy 9 Owners Council Family Charter Family Foundation Copyright Jeff Haltrecht | family business advisor 2011 20
  • 21. Will They Do The Work The Way You Do The Work? No But make no mistake: they will work as hard. Copyright Jeff Haltrecht | family business advisor 2011 Just in a different way that plays to their strengths and vision 21
  • 22. What About De-facto Control? Yes, you must give this up too! Copyright Jeff Haltrecht | family business advisor 2011 Let them lead 22
  • 23. Gifting The Business To Your Children Is A Recipe For Wealth Destruction Give your adult child a large enough sum of money and ask them where they would invest it. If they say in the business, you know an internal transition is possible Copyright Jeff Haltrecht | family business advisor 2011 If they say no thanks, sell the business outside 23
  • 24. Monetize The Value Created, While Shaping New Realities Starting fresh never felt so Copyright Jeff Haltrecht | family business advisor 2011 good! 24
  • 25. Lead With Your Entrepreneurial Spirit While Accessing Breakthrough Solutions the A bout r! a utho I believe being a trusted advisor involves listening 鍖rst. The more I seek to understand your business and what you are dealing with, the richer the dialogue becomes. I have a friendly and engaging work style that is balanced between asking questions, challenging, and Copyright Jeff Haltrecht | family business advisor 2011 providing solutions for you to consider. What I dont do is make decisions for you. Our conversations are designed to stretch your thinking, for me to be a sounding board, and most importantly, a Jeff Haltrecht | family business advisor catalyst for you and your companys growth. 25
  • 26. Treating You With Respect, While Challenging For Better Performance the A bout r! o auth Strategic Thinking When applied correctly, values guide behaviour Dev and set the tone for interaction between Lea opment Mod ness eling people. Here is what you can expect when we el ders work together: i Exceptional Bus hip Experience Treating you with respect Copyright Jeff Haltrecht | family business advisor 2011 n M ar atio ke Challenging for better performance ov tin g Inn Helping you be internally driven Jeff Haltrecht | family business advisor Putting ideas to action Embracing change as the path to opportunity Communicating candidly Delivering results 26
  • 27. A Safe And Private Place To Have A Proactive Discussion s Pro duct Helping small to mid size business Strategic Business Plan owners maximize wealth within Build your business with powerful yet simple the company so that when you choose strategies that add to company wealth to sell or transition sometime in the Business Growth Advisor future, the business is valued at the highest Working one-on-one, we take a solid look at price possible. your strategic plan, leadership style, and Copyright Jeff Haltrecht | family business advisor 2011 management productivity, all with the intent of helping you maximize value within the company Succession Planning Effective solutions for realizing business wealth - so that the day you choose to transition or sell - the company gets the highest price possible 27
  • 28. Have A Terrific Day! Contact Information Building Company WealthTM WEB & BLOG TWITTER LINKEDIN Copyright Jeff Haltrecht | family business advisor 2011 EMAIL PHONE - 905.601.0311 OFFICE - Oakville, Ontario, Canada 28