Successon Planning Part 6: Family Strategic Planning

In Successon Planning Part 6: Family Strategic Planning the emphasis is to develop a framework that allows a family business to be well run and to understand the structure that is needed to address the issues specific to the family owned  business.

Objectives and Goals

You should set reasonable objectives for the firm, based on the mission statement, to ensure accomplishment of the firm’s mission. Objectives should be clearly stated, realistic, measurable, time specific and challenging. Objectives can be created for:

 ü  revenue growth,

ü  earnings growth,

ü  sales and market share growth,

ü  new plants or stores, and

ü  product/service quality or corporate image.



Strategies are determined by your answer to the earlier question: “What will the firm be like in the future?” Your strategic options include the following:

 1.    Stability–success is derived from little change (rare).

 2.    Profit strategy–sacrifice future growth for profits today.

 3.    Growth strategy–growth may be achieved through vertical integration (expansion from within), horizontal integration (buy a competitor), diversification, merger or retrenchment (turnaround or divestment).

Action Steps

 Once the strategy is selected, action steps should be specified that will guide the firm’s daily activities. An example of an action step is creating a budget to project the costs of a strategy. This process also is known as tactical planning. The steps in tactical planning should be practical and easy to implement and account for; their purpose is to convert goals into manageable, realistic steps that can be individually implemented.

Family Strategic Planning

 The entire family should develop a mission statement or creed that defines why it is committed to the business. By sharing priorities, strengths and weaknesses, and the contribution each member can make to the business, the family will begin to create a unified vision of the firm. This vision will include personal goals and career objectives.

 Important issues to consider are how to set priorities for the family and the business, i.e., decide which will come first the family or the business. How you answer this question will influence your planning. Some family members will opt for the business first, reasoning that, without a business, there will be no financial security for the family. Others will opt for the family first, reasoning that no business is worth the loss of family harmony. A third alternative is to serve both family and business perhaps not equally, but as fairly as possible. Under this alternative, all decisions are made to satisfy both family and business objectives. For example, a family may have a policy that any family member may join the business, but he or she must meet the requirements of the job. You may find this is the best alternative because it forces a commitment to both the family and the business.

The Family Retreat

 Trying to plan a business strategy during normal office hours is almost impossible. Plan a family business retreat to discuss the goals of the individual family members and the goals of the business. The first retreat should focus on reviewing the firm’s history, defining family and business values and missions, creating a statement about the future of the business and reviewing areas that need more attention.

 The purpose of the retreat is to provide a forum for introspection, problem solving and policy making. For some participants this will be their first opportunity to talk about their concerns in a non-confrontational atmosphere. It is also a time to celebrate the family and enhance its inner strength.

 A retreat usually lasts two days and is held far enough away so you won’t be disturbed or tempted to go to the office. Every member of the family, including in-laws, should be invited. Begin plans for your retreat about six weeks in advance.  Note: If you have a trusted business advisor have them work with you on your agenda and planning

 Once you have picked a time and place, establish a tentative agenda. Your actual agenda will be tailored to meet the unique needs of your family and business. Usually families will identify some of the following issues for discussion at their first retreat:

 q  A family creed or mission statement.

q  Management succession.

q  Estate planning.

q  Strategic business planning.

q  The reward system.

q  Performance evaluation.

q  Communication within the family.

q  Preparing adult children to enter the business.

q  Transition timing.

q  Exit and entry policies.

 You may consider using a retreat facilitator. The facilitator helps identify issues for discussion before the retreat and keeps the atmosphere non-confrontational during the retreat. The facilitator does not solve the family’s problems but guides the family in doing so.

 The retreat is the beginning of a process. When a consensus is reached by the participants, policies should be set, courses of action planned and responsibility for implementation assigned. When agreement cannot be reached, further discussions should be planned, possibly with the continued assistance of the facilitator.

 One important outcome of the retreat should be plans for periodic family meetings and retreats in the future, so the dialogue will continue. Open communications will enable the family to come to grips with problems and issues while they are fairly easy to solve. Once family members have reached a consensus on the continuity of the firm and their roles in it, you can begin planning for succession.

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