By Timothy G. Habbershon Every family business owner thinks about succession, but because many equate the term with retirement or even death, few really plan for the transition. My approach is to urge senior business owners to think of succession as an ongoing business development goal. They need to ask themselves a crucial question: Will my company have the resources and capabilities it needs to compete after I leave?
Business owners often are the resource pool for their companies and the basis for its competitiveness. But even those senior managers who consider themselves very important to the business do not think of themselves as a collection of resources and capabilities. If they leave without ensuring that their knowledge exists in other places and other people, the company will stumble.
While working for a major corporation, Richard Crossman started a part-time occupational safety and health training and consulting business. He recently turned RPT Safety & Health Services, in Scotia, N.Y., into a full-time venture. His wife, Donna, and daughter, Julie, have joined him. Donna's expertise is in education, training, and writing, while Julie's experience is in marketing and administration.
The three make a good team, but Richard's particular knowledge is critical. He represents what I call the "familiness" of the company. That's a term I use to describe an individual family member's influence over a company. Familiness can be both a positive and a negative. In Richard's case, his 30 years of experience in safety and industrial hygiene are its intellectual property. His teaching and training skills are the basis for RPT's products. His professional reputation, earned with the help of numerous certifications in the safety industry and previous regulatory positions (New York State Health Dept. asbestos supervisor and inspector, hazardous materials technician, and occupational health and safety technologist)—is the company's brand.
But Richard also has negative attributes that constrain the company. He doesn't communicate well with Julie and Donna or give them the time they need to learn from him. He isn't planning for the future or creating formal business processes such as budgets, marketing plans, or personnel guidelines. And over time, even his extensive experience will turn from a positive to a negative if he doesn't pass his knowledge to his co-workers.
Richard needs to develop a "familiness succession plan" to ensure his company's future. Such a plan has three parts: picking, building, and transitioning resources and capabilities. For RPT, picking means bringing replacement resources from the outside, such as hiring or partnering with other safety specialists. Building refers to enhancing existing resources, such as documenting intellectual property. The third step, transitioning, means passing resources such as industry contacts and specific skills to Julie and Donna. Taking a "familiness" view of the future will help the Crossmans' new business become a lasting one.
Timothy G. Habbershon is the director of the Institute for Family Enterprising at the Arthur M. Blank Center for Entrepreneurship, Babson College.