illustration of business people in different stages of their career

Succession Fireside Chat: How to make good decisions for your family business during the succession process

Succession Fireside Chat: How to make good decisions for your family business during the succession process

Synopsis
3 Minute Read

How can you make good decisions for your family-owned business during the succession process? In the first episode of our Succession Fireside Chats series, MNP’s Lynne Fisher and Eben Louw discuss best practices for decision-making, including:

  • Defining your goal
  • Prioritizing transparency
  • Identifying key decision-makers
  • Structuring your decision-making process
  • Getting comfortable with discomfort

Each of these steps can help reduce uncertainty as you navigate the path toward your succession goals with confidence.

National Team Leader, ExitSmart

Family-owned businesses are complex — and if you are considering succession, you may be wondering which steps to take next. How do you make good decisions to benefit everybody involved in the process? 

In the first episode of our Succession Fireside Chats series, MNP’s Lynne Fisher and Eben Louw discussed the key elements of good family business decisions. They also covered what to include in the decision-making process to achieve a successful outcome.

Watch the full video above or read the article below to discover how to navigate decision-making in family-run businesses to reach your succession goals.

What defines a good family business decision?

Every family wants to make the best decision for the future of their business. However, many families make decisions too quickly, fail to consider the desires of each family member, or oversimplify complex situations during the succession process.

It may be tempting to choose a low-cost or simple decision that does not fully account for family dynamics in favour of achieving a quick outcome for your business. Additionally, a fast decision may fulfill the immediate needs of your business but fail to support its future goals.

Several elements separate good decisions from others. A good decision is intentional and considers the complex dynamics and perspectives of each family member. It will also include a clearly defined approach to ensure a successful outcome

What are the best practices of making good decisions?

These best practices can help guide your decisions about the future of your family business during the succession process:

Define your goal

It is important to keep the original question you were trying to answer in mind during the decision-making process. This will help you define your approach to reaching your goal. For example, you may be asking yourself if all family members should have an opportunity to be involved in the family business in some manner in the future.

Answering this question will involve approaching the members of your family to determine what conditions are necessary to achieve this goal. You may find that everyone has a different answer — and that a solution that satisfies everyone may not be possible. However, it can also help you identify conditions for success and the approach you must take to achieve a satisfactory outcome.

Prioritize transparency

It is essential to communicate clearly with your family members during the succession process. Transparency will help ensure everyone is informed about the decisions you are making for the future of your business and the reasons for those decisions. It will also help you avoid surprises at the end of the process — reducing the risk of making last-minute changes to your plans.

Many business owners fail to communicate their succession plans to their family members — and are surprised when their chosen successor has no interest in taking over the business. Prioritizing transparency early will ensure all your key stakeholders are informed and on board with your plans long before you begin the succession process.

Identify key decision-makers

Every family has its own process to guide family decisions such as where to go on vacation — or business decisions such as how to handle inventory purchases. But ownership decisions, such as major capital investments or allowing employees to buy into the business, are much more complex. These decisions have more factors at play and need to be made at a higher level. 

Identifying who should be included in the decision-making process for succession is even more complex. Some family businesses either have too few people involved or too many — creating complications that may take time to resolve.

It is critical to identify who has a voice in the decision and who has a vote early in the process. Additionally, consider who will ultimately be impacted by your decisions. It may be worthwhile to include each of these key groups in the decision-making process — either in a decision-making or consulting role — for their insights and knowledge.

Structure your decision-making process

Each family makes decisions for its business differently. While some may rely on the consensus of every family member, others may favour a majority vote between a few key decision-makers. Setting up policies in advance can help you define how decisions are made in your business.

While this approach may seem formal, it is helpful to have a set of rules that everyone can refer to throughout process. Policies can include who is able to make decisions for the future of the business and how decisions are achieved. This helps clarify expectations and reduce uncertainty during times when emotions may be running high.

Get comfortable with discomfort

It is important to get comfortable with tension to make good decisions for your family business. Succession is time-consuming and it may take years to reach a resolution. The process may also expose unexpected questions to answer and additional decisions to make along the way — and uncertainty produces discomfort.

Many business owners choose to resolve issues quickly to reduce discomfort. However, it may be more beneficial to sit with those questions a little longer despite the tension. This will enable you to give each decision the attention it needs, find ways to simplify complex situations, and make fully considered decisions.

Take our ExitSMART™ Succession Assessment

You’ve worked hard to create a successful business. Use our free assessment tool to discover if your succession planning is on the right track to get the most out of what you’ve built.

Take the next steps

The succession process is complex, and every family is different. However, following best practices such as prioritizing transparency and structuring your decision-making process can help achieve a successful outcome for your family business.

If you need support on your succession journey, contact a member of MNP’s Succession Services team. We can help you develop a succession strategy that works for your unique situation.

Lynne Fisher

National Team Leader, ExitSmart

780-401-7085

1-800-661-7778

[email protected]

Insights

  • Performance

    April 16, 2024

    Software in British Columbia: Taxation in perpetual motion

    What software is taxable in British Columbia for PST purposes? Discover the changes introduced in the province’s 2024 budget.

  • Performance

    April 16, 2024

    2024 Federal Budget Highlights

    View MNP’s full tax analysis of the 2024 federal budget.

  • Progress

    Your farm succession plan isn’t complete until it exists in writing

    The average age of farmers in Canada is increasing. Having a written succession plan becomes more important as you age, to help secure your legacy, protect your farm operation, and reduce conflict.