Many companies in the construction industry are family owned and run businesses. Planning ahead is important for the success and longevity of these businesses. This includes understanding the conditions that can lead to a successful succession plan. GBCA Member Cumby, Spencer & Associates Financial Group has prepared a brief article about the succession planning process.
From W. Gibb Dyer, Jr.:
Unfortunately, most leaders of family businesses manage succession poorly. One reason for this is that family leaders often view succession planning as “planning your own funeral.” … Not only do leaders of family firms find it difficult psychologically to plan for succession, but family members, nonfamily managers, board members, and others involved with the business often fail to encourage family business leaders to plan for succession. Raising the issue of succession planning can be seen by the family leader as a sign of disloyalty, since it amounts to asking the leader when he or she will retire.
Encouraging succession planning also may call into question the competence of the family leader. Given these “resistance factors,” very few family firms have a well thought out succession plan. Furthermore, research has shown that family businesses that don’t plan for succession do poorly financially after succession, as compared to those family firms who have a plan in place that is shared with the family and senior management.
Succession planning is not easy. [F]amilies need to be able to discuss this issue openly with the family leader and plans need to be put in place to make sure that the family and the business are successful after leadership is turned over to the next generation.
Read more about the conditions for a successful succession plan: