Succession Planning in Your Family Business

sign at truck world succession planning in your family businessFemale entrepreneurship is growing. With Boomers retiring, more are turning to their daughters, not just their sons, to bring them into the family business. This is happening even in male-dominated sectors. That’s why I was so excited to present “Succession Planning in Your Family Business – When a Woman Takes the Helm” at Truck World this past weekend.

I believe there are fundamental differences in the way men and women think, especially in business. There is a lot of research that points this out, stemming from psychology, sociology and economics. I reviewed what I think are two of a number of key differences:

  1. How women factor their relationships – especially their family and love relationships – in their business decisions;
  2. And how women tend to be more deliberate and consultative before they make decisions.

This is not to say that ALL women are like that. Or that ALL men are not. It’s not about making one gender right or wrong. It’s about understanding each other better. Especially when it comes to risk, money and making decisions that affect both family and business.

So what does this all mean for succession planning in your family business?

Adopt an inclusive, consultative style

Regardless whether your family business is being passed on to a daughter or a son, be inclusive in your deliberations. Open up to your children’s spouses as the more supportive they are, the likelier the chance of success. It doesn’t matter if you believe women are born or conditioned to be more inclusive. In today’s business world, that is a good thing. And it’s not just a female trait! Millennials in general expect inclusive decision-making and not “top-down”. You should welcome that younger family members to want second and even third opinions, from outside experts, online research and trusted outside sources. While this make take more time, it often makes for sounder decisions.

business couple in conflictUnderstand the potential areas of conflict between family, ownership and business operations

Whether the family business dynamics are just between spouses or involve several generations, understand what motivations are at play. That’s where the Three Circle Model of Family Business is useful.

Is the person coming at the conversation as a family member, an owner or as a business operator? What happens when a family member is part-owner, but not actually working in the business? What if they are family and working in the business, but have no ownership stake?

You can see the potential for conflict abound. Consider getting outside help untangling these dynamics, for a coaching or a trusted advisor.

silhouette of a woman looking out at the setting sunPlan your retirement with your honey, but be ready to take the helm

If you and your life partner are in business together, by all means dream and plan of your retirement together. But your succession plan should account for the worst.

My observation has been that even though many women are excellent business leaders and run their family’s every day finances, they often lack confidence about investments and insurance. Maybe it’s contrary to our caregiver roles to contemplate that something could happen to our loved ones. Or that our marriage could break up.

These situations Doris Belland describes with poignant, colourful stories in Protect Your Purse – Shared Lessons for Women: Avoid Financial Messes, Stop Emotional Bankruptcies and Take Charge of Your Money. An estimated 62% of Canadians don’t have a will, she points out. Too many of us dangerously defer preparations for the inevitable, especially you consider the average age of a Canadian widow is 56!

A 2015 survey from asset management giant, BlackRock Inc., warns about a “gender gap” in saving and investing. It observes that women earn less, invest less, and are less engaged with their finances. A 2017 survey commissioned by Capital Group in the US found that only 52% of women feel confident they have enough knowledge to make good financial and investment decisions. The good news in that survey at least is that Millennial Women seem to be more confident, vs. Boomer women.

Do the guys feel more confident because they are better at investing? Not really, says Fidelity Investments. Women lack confidence, but when they put their mind to it, their protfolios often outperform men.

While it’s great to see business couples planning for their retirement together, women need to pay extra attention to their finances – investments, insurance, wills. With women still outliving men, the head-in-the-sand and let’s-ride-into-the-sunset-together mindset is not recommended here. Don’t be caught off-guard like my friend Judy. Her husband dropped dead of a heart attack just days before the contract closed on the sale of their business. Judy is a capable business woman but she was woefully unprepared for this cruel surprise, and sadly under-insured. The sale of the business fortunately still went through, but it was a very stressful for her.

Take the time and do it now

Succession planning in family business can be a long, drawn-out process. So start doing it now. Enlist the help of your accountant, your financial planner, as well as a succession planning specialist. And remember some of the basic gender differences so that you can have more productive exchanges about family and love and business!

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