The research on family business shows that while many families have a “plan”, or start a succession plan, it “runs out of gas” before it ever reaches completion.
It runs out of gas because there was no one in charge. No one who was willing to ask the hard questions and push for the answers so the plans could actually be created and implemented based on reliable information.
A dentist had a sign on his ceiling so the patient would read it when the chair was tilted back. It said, “The dentist can’t do what the patient won’t do!” Unless you practice basic oral hygiene and listen to your dentist’s advice, he or she ultimately can’t save your gums and teeth.
And so it is with family business advisors and their farm clients. A client hires us with the desire to deal with a problem, ease pain or to prepare for transition. The advisor gathers information – seeking understanding of family and business culture and values, and makes recommendations for processes, decisions and actions, which will help the client achieve stated goals. But sometimes, the family client wants the result yet is unwilling to take the steps necessary to get there.
Statistics show that 65% of second-generation and 90% of third-generation businesses fail. One of the primary success factors for those few business families that succeed is the appointment of a “planning coordinator.”
A planning coordinator is usually a family member delegated or appointed to make things happen. The coordinator’s job is to stay focused on the goal and keep pushing the rest of the family forward!
The family coordinator is in charge of collecting the information the advisors require. When no one is in charge, the data received by advisors may end up being inconsistent.
As family succession advisors, we work the family’s existing team of professional advisors, such as bankers, lawyers, accountants and financial planners. This outside team is usually enthusiastic about taking on their tasks. The key to success, however, is clearly in the hands of the family members – and they must use that “key” to open the door to a new future for their family and business.
Just like the example of the dentist, advisors can’t do what the family won’t do. Too often advisors are overly credited for either success or failure. We can be catalysts, coaches and bring experienced insight, but ultimately, the final results are not in the advisor’s hands.
Therefore, even the best advisors need the family to take charge of its own process. It’s your farm business after all – it’s your responsibility to gather what’s important. By putting one family member in charge, there will be a much smoother progress towards succeeding with succession.
Here’s the good news. It does not require any experience to be the planning coordinator – in fact common sense is really all that is needed … that and a desire to be part of the solution. Don’t let your farm succession planning process “run out of gas”!