14 | Q2 2021 Sep20016 The Future Face of Your Business The strategy of identifying and developing future leaders to fill business-critical roles, known as succession planning, is key to moving a business forward. Not only does succession planning ear-mark new and upcoming talent within your staff base, it also ensures a company is fully prepared if a senior leader or manager should suddenly leave the business. Matthew Braithwaite TEP is a Partner at Wedlake Bell and Co-Chairs the STEP Business Families Special Interest Group. He tells us that succession planning should be viewed as a process, not an event, and that it is never too early to start. “For businessowners, the very least they should do is make a will, which prescribes what should happen to the business in the event of their death, in order to provide a default position in case plans cannot be implemented during their lifetime. If the time is right, then discussions around succession planning - even the most embryonic - should be had. For businessowners, this is perhaps the chance to understand whether the next generation (typically their children) are prepared to take over the running of the business, or whether Plan B (a sale) needs to be considered. If the latter, the businessowner then has time to plan and put their business in its optimum condition for sale. The risk otherwise is of a ‘fire sale’ upon the happening of an event (i.e. a death) and potentially without the involvement of the current businessowner or founder. For the incumbent generation, having discussions early means they are put on notice that there might be a role for them in the future ownership of the business – a role that they might not have otherwise assumed would be available, - with a chance to grow into their role and equip themselves with the skills needed in anticipation of taking the business forward.” Matthew emphasises the point that the businessowner should “never assume”, meaning that the next generation may not wish to succeed the business and especially not to assume that one particular individual is more capable than the others. “Successful succession planning is about having open and honest conversations between generations to banish misconceptions and adjust expectations. “Having discussions with family members early will help businessowners decide whether they need to recruit external talent, and/or what nurturing needs to take place. For some businesses, who the successor will be is easier to identify than others because they may already be involved in the business and require very little in the way of nurturing. For others, perhaps because of age or the pursuit of another career, they will require additional support to adapt to the business environment their forebears have created. Education is therefore a key component of the succession planning process. If it becomes apparent through discussions with family members that there is no one suitable or willing to take over the business, or that there might be with support of external talent, it then becomes necessary to consider recruiting externally into the business. As a matter of good practice and to attract external talent into the business, it is important to ring-fence the interests of the family from the business by devising separate governance structures for each. As well as the obvious benefits for the family and the business in terms of codifying views and establishing boundaries between the two, it demonstrates to external talent that they will be able to flourish in the business on their own merits, without risk of a family member being treated any differently.” Matthew is keen to promote the cash flow model, which is provided by all financial advisors, as a useful tool to enable current
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