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    Changing Places: Making a Success of Succession Planning for Entrepreneurs and Family Business Owners
    Changing Places: Making a Success of Succession Planning for Entrepreneurs and Family Business Owners
    Changing Places: Making a Success of Succession Planning for Entrepreneurs and Family Business Owners
    Ebook123 pages1 hour

    Changing Places: Making a Success of Succession Planning for Entrepreneurs and Family Business Owners

    By David Franzetta

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    About this ebook

    You've built your company up and made it a success. How can you be sure that the next generation of company leadership will sustain your success? What role will you play in that evolution? And where can you, the small business owner, look for help with succession planning, when most of the literature on the subject is aimed at the HR departments of Fortune 500 companies?


    Changing Places is written for you, filling that gap by preparing you to deal with the complex web of emotionally charged situations that arise from conflicting personal, family and business goals. Throughout the book, Dave Franzetta and Moss Jackson emphasize the importance of managing not only the structural changes that you set in place, but also the personal, transitional challenges that arise from changing circumstances. They take you through all the important components of planning your exit and managing the transitions, beginning with preparing for your own, personal transition by creating your personal succession planning roadmap and building a transition advisory team. Other chapters are devoted to critical topics, such as hiring, leader selection and leadership development for smaller firms, leading to a discussion of options for changeover and buyout funding, concluding with advice on preparing your company for sale to outsiders when that is your best option.


    Whether you are ready to step down soon, or ten years down the road, Changing Places is your essential guide. Every topic is thoroughly informed by the authors decades of experience. Their stories bring to life the potential problems faced by business owners, and the practical solutions others have adopted. Thought provoking questions at the end of each chapter will launch and direct your own succession and transition plans.


    Start your leadership transition journey now. Changing Places will help you keep the success in succession planning.

    LanguageEnglish
    PublisherAuthorHouse
    Release dateOct 2, 2012
    ISBN9781477266922
    Changing Places: Making a Success of Succession Planning for Entrepreneurs and Family Business Owners
    Author

    David Franzetta

    Dave Franzetta is an innovative thinker and creative problem solver who developed strong leadership and leadership development capabilities over his thirty-year career with Prudential Financial. When he retired from Prudential in 2004 he began his work as an advisor with international think-tank Interchange Associates. A year later he founded Designed Outcomes, a highly specialized consulting firm that works with senior executives to resolve complex and pervasive business problems and business-growth challenges. His focus is on finding relatively inexpensive and easy to implement ways to resolve, and sometimes simply dissolve, pervasive and vexing business problems. Specialty areas include: working with senior executives to improve their effectiveness, leadership development program design and delivery, and transition and succession planning for entrepreneurs and family-owned businesses. Moss A. Jackson, Ph.D. is a clinical and organizational psychologist. For more than thirty years he has specialized in teaching people to navigate their lives with success by helping them discover and execute their personal visions and dreams. He is the author of two previous books, Navigating for Success: Passion Goals, & Action, and Navigating Your Business Relationships: 52 Skills You Need to Know. He is President of Corporate Initiatives, which offers cutting edge, on-line assessments to assist clients in identifying their talents, skills, motivators and competencies, leading to increased performance and personal satisfaction

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      Book preview

      Changing Places - David Franzetta

      V00_9781477266922_TEXT.pdf

      Waiting for the fish to bite

      or waiting for wind to fly a kite

      or waiting around for Friday night

      or waiting perhaps for their Uncle Jake

      or a pot to boil or a Better Break

      or a string of pearls or a pair of pants

      or a wig with curls or Another Chance.

      Everyone is just waiting.

      -Dr. Seuss3

      Sign Icon #2.jpg

      Any entrepreneur or family-business owner who is considering an exploration of the subject of succession and transition planning has to begin with the question, Why bother? After all, most business owners are generally happy with how their business is going, and look forward to continuing to work in the business for a significant period of time, well into the future. It’s easy to simply dismiss the issue of succession planning—leadership continuity, in other words—or put it off to some future date.

      But, whether you like it or not, the future has a way of sneaking up on you. At some point you are going to be changing places. You will stop going to the office every day, and someone else will take over for you. You will find different ways to enjoy yourself, maybe even crossing items off of your personal bucket list.

      You are probably like every other entrepreneurial business founder and owner, hoping to create a successful future, both for yourself and your loved ones, as well as for the next generation of leaders of your company (who in some cases might be your own children). Unfortunately, many entrepreneurial businesses—and most family-owned and run entrepreneurial businesses—fail to successfully navigate the succession and transition process.

      Only one in four such businesses makes a successful transition to the second generation, the others failing or being sold before the children of the founders get a chance to take over. Of those that do last to the second generation, only one in three makes a successful transition to the third generation.4 These are not encouraging statistics.

      And this is not merely a twenty-first century problem. The failure of businesses, especially family-owned businesses, to last more than one generation is so pervasive that there are stock phrases in many languages describing the propensity for family-owned businesses to fail before the founders’ grandchildren have taken charge:5

      •   In the United States, Shirtsleeves to shirtsleeves in three generations.

      •   In Mexico, Padre bodeguero, hijo caballero, nieto pordiosero. (Father merchant, son gentleman, grandson beggar.)

      •   In Brazil, Pai rico, fil honobre, neto pobre. (Rich father, noble son, poor grandson.)

      •   In China, Fu bu guo san dai. (Wealth never survives three generations.)

      •   In Italy, Dalle stalle, alle stele, alle stalle. (From the stables to the stars and back to the stables.)

      A Head Start

      We’d like to help you improve your personal odds by giving you a head start on building a viable succession and transition plan. Our goal is to help you approach the track record of the world’s longest-surviving family-owned business, The Houshi Onsen, a traditional inn in Japan that is currently run by its forty-sixth generation of family members.6

      But be cautioned: even when a business owner works diligently to create business succession and transition plans; things don’t necessarily go forward smoothly. While the plans may appear sound, there are often many invisible obstacles and interpersonal land mines that blow up and destroy people’s dreams and relationships. As William Bridges has pointed out in Managing Transitions: Making the Most of Change,7

      It isn’t the changes that do you in, it’s the transitions. They aren’t the same thing. Change is situational: the move to a new site, the retirement of the founder, the reorganization of the roles on the team, the revisions to the pension plan. Transition, on the other hand, is psychological; it is a three-phase process that people go through as they internalize and come to terms with the details of the new situation that the change brings about.

      Managing your way through these transitions is the key to successful succession planning. Founders and owners need detailed plans with carefully plotted paths to help the different generations of owners and leaders uncover these land mines and successfully navigate through them toward a promising future.

      The Reality

      Given the importance of careful planning to the continuing success of an organization, it is perhaps surprising that the number of U.S. organizations with a formal succession plan in place decreased during the most recently studied five year period—from 29 percent in 2006 to 23 percent in 2011—based on a poll from the Society for Human Resource Management (SHRM). 8

      According to the SHRM poll data, less than a quarter of businesses have a formal plan in place, though the numbers improve when informal plans are considered, with more than one-third, or 38 percent, of organizations currently having at least an informal succession plan or process in place (up from 29 percent in 2006). The number who said their organization had no intentions to develop a plan remained roughly unchanged from 16 percent in 2006 to 17 percent in 2011.

      Sixteen percent said their organization’s staff size is too small to create a formal succession plan. Again, not surprisingly, virtually all family-owned and run businesses fall into this grouping. The owners of these businesses keep their eyes on the road directly in front of them, but spend little or no time thinking about or worrying about what challenges might face them in the future, when they have to consider transition of their business ownership and management to the next generation of owners and managers.

      Why Avoid It?

      The obvious question is why do entrepreneurs avoid succession and transition planning? Again looking to the SHRM report:

      The number one reason organizations are not developing formal succession planning is because more immediate projects are taking precedence—not surprising given that organizations are focusing their energies on dealing with an uncertain economic outlook. Still, succession planning has significant strategic implications for organizations and should not be put on the back burner, especially during times of economic volatility.9

      Perhaps it’s because leadership transitions at privately held companies take place so infrequently that little attention has been paid to how to do it. After all, many family businesses have the same leader in place for twenty to twenty-five years. Compare this to publicly–owned firms, where the average CEO tenure is six years.

      It is easy to see that the extended

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