2. Frustration among the adult children at a lack of action from the outgoing generation in this area. There is a high level of procrastination; always an excuse why the matter is not being addressed when approached about future planning. Answers such as "we're too busy right now" or "it doesn't suit this week because ..." are common.
No excuse to delay this process is satisfactory. I cannot stress enough the importance of beginning the process of your succession/exit now rather than leaving to a later date sometime in the future.
There is a strong tendency on the part of the outgoing generation to leave "passing the baton" too late, which denies the opportunity to achieve the best outcome for themselves and the incoming generation. So what is the right age for the incoming generation to take responsibility for key management and strategic decisions?
My personal belief is 35. Why? Because at this age the incoming generation to the business or farm has a good 10 years of high-level energy to give the business or farm. So timing of transition and exit, like with most events in one's lifetime, is of high importance in business and farm succession.
As human beings, we resist talking about the topics of mortality and change. The process of succession/exit will involve discussions about both. At some point in time in the life cycle of your business or farming careers they must be addressed.
Both bring with them emotional and financial issues that will require the asking of the hard, difficult questions. It is not surprising, therefore, that the majority of businesses do not have succession plans; plans that must ultimately cover:
1. Management succession
2. Equity transfer
3. Estate transfer
4. Total exit
If you fail to address your succession/exit by inadequately planning (or not planning at all) then you run the real risk of getting zero value out of your lifetime of hard work!
So where to start? Firstly, the best people to talk to are your family. Next, talk to your professional advisers such as your accountant, lawyer and banker. The use of an independent expert's "voice" is also recommended; a person with in-depth knowledge of the process. This person you will find very helpful in the process, particularly in family-related successions and exits.
Plans developed must be flexible and able to cater for changes as peoples' lives move on. Depending on the complexities of the family, the business or the farm, the process may require some time to complete. It's not going to be easy, with your greatest challenges likely to loom as:
1. Opening family communication lines
2. Managing family relationships and expectations, and
3. Identifying a successor/heir to the business founder/CEO
Change and its management and challenges will be inevitable, but remember that in the end, one of the greatest legacies a person can leave their family is the fruits of their life's work.
-Barry Rosenberg is a director at Moore Stephens Markhams Hawke's Bay Limited.
-Business and civic leaders, organisers, experts in their field and interest groups can contribute opinions. The views expressed here are the writer's personal opinion and not the newspaper's. Email: editor@hbtoday.co.nz.
