Every business has at least one thing in common: it needs someone in charge to succeed. And in the world of family enterprises, most firms are owner-centric — sort of a one-man show managing all aspects of the business. When we did our internal study a few years ago, approximately 75% of all family owning businesses are highly dependent on the principal owner-manager to make all the decisions. In Asia, we refer to them as Emperors!
The most fundamental question is what happens if the “emperor” dies? It’s a grim and stark reminder that death can happen anytime and to anybody, especially in this tumultuous time where hundreds of business owners have already died. A future death of a business owner and its myriad of consequences are things that need to be addressed now. The quicker these key business leaders get their succession planning in order, the better. A cautionary tale worth sharing with business-owning families is that family and business transition planning are crucial game changers for family firms.
It does not matter whether you are a founder or a second- or third-generation leader in your 50’s or 80’s, the point is not to take succession planning for granted. And that you should never for one second think of yourself as a superhero and take the inevitability of death lightly. I like the inspiring wisdom found in this old Chinese proverb: “The best time to plant a tree was 20 years ago. The second best time is now.” Basically in the context of this article, it means that if you want your legacy and business to continue in the future, the best time to act is now.
What happens if no plans are made?
When you’re dead, you’re dead. What happens to your business, however, is a totally different story. If you planned your leadership and succession plan early, you will get a pat on the back in heaven. You can be assured that your legacy will live on and in your memorial service, you will be remembered and acknowledged affectionately.
What if you never had one? I can assure you that if you do not prepare for this completely avoidable mess, your family, employees, partners, creditors, and the business itself will be left in chaos. Don’t expect to be remembered fondly. At the height of the pandemic, the bulk of my intervention focused on crisis and post-founder death management within family-owning businesses. The lack of preparation caused many organizations to momentarily stop functioning. And the most difficult moments happen after the memorial service when I hear agonizing remarks and finger-pointing from all sides: “If only Papa had listened to his advisor’s pleas to plan for his succession.”
In fairness to these leaders, every time I reminded them of the importance of succession planning, they would constantly nod in agreement and would always say, “I agree, we must do that.” But they never do it anyway or they were deliberately slow in doing it. And then in a blink of an eye, COVID-19 makes the founder face death and while being intubated, he reflects on the "what ifs" and the “what should have been done".
A sudden, complicated death
When you are facing death, it is easy to believe that life has passed you by. Your past can seem littered with bad choices and squandered opportunities. Now, it feels like the end game, the downward stretch toward an utterly failed life. And with death comes the hardest part, with your face pressed up against the casket glass, you see a parade of people mostly family members and employees crying softly, helpless, numbed, their heads bowed, uncertain of what lies ahead as the business is in limbo.
Think of it like this: when you die, someone will have to pick up the pieces, but everyone you know will be too focused on mourning your demise. One thing is clear though, you will be blamed for the anticipated mess that is about to unfold even before you turn cold in your grave.
To be continued...