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Learning from Others’ Mistakes With Family Business Succession Planning

Business meeting with 4 people around a table one laptop opened. One woman is standing by a whiteboard learning the mistakes from a family business succession meetingNo one enjoys seeing an established brand throwing in the towel and calling it quits. Unfortunately, many companies fail when they don’t have family business succession planning.

That being said, failure is one of the best teachers we can have. Learning from the mistakes of others before repeating similar problems can be very helpful. We know that you can’t fix every blind spot without family business consulting. That is why we offer continuity planning for many unique brands.

We understand how challenging it is to know where to guide your firm. At Positively People we want to offer insight for professional guidance and family business advisory services. Read on to learn more.

Don’t Let Your Board Become Complacent

Companies can often survive decades before succumbing to poor planning and management. These firms also go on with business as usual without setting new goals, thus stunting their growth.

Even if you’re satisfied with what you’ve accomplished, you can’t allow competitors to form. When you stop caring about similar products and services, they eventually surpass you. Instead, it’s best to be proactive, even when your firm has achieved what it meant to. If you no longer care about the future, it may be time to retire.

Too many recognized brands have failed from leaders who stop setting goals. Make sure you revitalize your board with effective strategies.

Plan for When Members Stepping Down

Some people plan for retirement, while others are sidelined by it. No matter which one happens, your company needs to have plans in place. A sudden loss of leadership can have severe consequences depending on their involvement. Plus, not all replacement members are effective, which can restrict your brand’s growth.

You could have several directors leaving at once, which could cause the organization to become directionless. Installing interim members isn’t enough to prevent tumultuous transitions. Executives today need to enact clear guidance for retiring members and future goals. Start family business succession with our experienced group of advisors.

Diversify Your Board with the Right Members

The entire point of expanding a board is to bring on new abilities into the organization. What happens when members come from every background but those needed?

Directors without appropriate experience may look great on paper but not in practice. They may expand into markets that your brand doesn’t belong to, forcing change to happen. When expansion is an uphill struggle, it isn’t happening correctly. Some of your board members need to have an intimate understanding of your industry.

Giving too much power to family governance groups can have similar results. Give your brand the advice it needs to enact better policies.

Keep Your Company Liquid for Emergencies

You might be able to assume when specific members may step down, but you can’t always know for sure. That’s why it’s best to maintain high levels of liquidity for unexpected changes. Some companies rely on debt to operate, freeing resources for other investments. However, once a few executives leave together, you have fewer available resources.

It can take a while to replace the cash that was depleted while cutting ties. That is also when you might notice minor mistakes ballooning into severe issues. Companies in that state can fall victim to poor management and limited cash. Make sure your firm always has a backup plan.

Beware Partnering with Private Investment Firms

Scoring a private investment firm as a partner is huge for a family business. However, it can also spell the beginning of the end for that brand. Investment firms know which businesses are a good fit for their shareholders. That doesn’t mean that they have the knowledge or background to make the right decisions for you.

Too often, investment firms get a spot in the boardroom. Their choices only serve to enhance their portfolio and don’t necessarily want to help you. Getting your company to fail may even be a strategic choice. Knowing which firms your brand should trust is very important.

Start Your Family Business Succession Planning Now

A family business with a bright future may not always have a plan in place for the worst-case scenario. Whether it’s optimism or inexperience, you can’t risk operating without contingencies in place. Even experienced board members don’t notice every issue you could face. It takes a professional group of advisors to offer in-depth solutions.

That is why we’re passionate about servicing unique firms across many fields. Choose Positively People for family business succession planning and contact us today. 

To learn more about how we can assist you in your family business fill out the form below or contact us at 843-225-3927

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