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I was recently asked this question by the owner of a family business with four sons working in the firm: “How do I choose which one will run the business?”Wow! There are so many ways to answer this question. Family business succession can be complicated. My first response was to ask, “Who wants to?” To which the owner did not know the answer. So that is a good place to start; however, there is more running the family business than just who wants to.

When deciding who should be the next-generation CEO and who should play supporting roles, let’s take a look at a few of the tough decisions at play here.The owner may be asking several questions: Who can run the business? Who wants to? Do we have the talent? Do we expect that they will want to?The Successor generation has questions too. Do I want to? Do I feel obligated to work in the business and/or run the business? Would I feel a sense of ownership or entitlement? Do I have what it takes to run the business?

"Family Business Succession: The future of your company and legacy depend on you to make these decisions."

 In many family businesses, these questions go unanswered for years, even decades. Sometimes the questions are never asked or not answered until it is too late. So let’s make the answers to the previous questions a little easier to deal with.

In order to make it easier to start, take a look at these key steps.

Create a strategic business plan for the next 10 years.

This includes a vision of the company, the strategic themes, and goals. This is more than a glorified goal-setting session.

Identify the CEO position clearly.

The next generation of management will lead an organization that is very different than that of the current generation. The stage of the business, changing market conditions, and additional family members may require a different set of skills than that of the current leadership. In addition to skills, consider the management roles necessary for the next generation business leaders such as decisional roles, informational roles, and interpersonal roles.

Assess interest and talents.

Some family members may have the talent but have no desire to lead the organization. Others may not have the talent, but are wanting or even expecting to run the business. Understand that possessing the talent and having the current knowledge or skills are two very different things. Possessing talent implies that they have the capacity to learn the skill or gain the knowledge necessary to fulfill the role. You may discover that a single interested member does not possess all of the talent but a combination of two or more may. This can work if structured correctly. You may also discover that none of the family is interested or has the talent to lead the business enterprise. If that is the case, consider the options of bringing in an interim CEO or selling the business.

Write a 5- 10-year development plan.

This plan should outline the various positions and responsibilities the successor(s) will fill. Create a time table with trigger events. Be sure to include responsibilities for the profitability of a branch, department, or project. Start with a basic outline. It can evolve as necessary.

Put the plan to work.

Once you have these key processes decided, it’s time to work the plan. It's not necessary for the successor generation to know exactly what you're doing if you are at the beginning stages of developing the skills and knowledge of one or more next leaders. However, they will need to know eventually. Let them know that you are planning the succession of the business. In doing so, you are mentoring to determine the best fit for the positions available. They should know the criteria they are being assessed against and that they will receive feedback on their success.

The decision of who will be leading the successor generation will be much more objective with the use of a written strategic succession plan. The time to start is now. Dr. James Lea, author of “Keeping It in the Family: Successful Succession of the Family Business” cites a study of 42 family-owned businesses which attempted transition to the next generation. Of the 42 reported, 14 started planning 10 years or more before making the transition of management. Of the 14, 86% of the companies were still in business 15 years later. Eight reported starting two years or less before handing over management. Of those eight, 75% failed.The future of your company and legacy depend on you to make these decisions. And help your family make their decisions. These decisions are tough for everyone, but they must be made.  It’s time to get started.

For more in-depth information to create a succession plan, download our Step-by-Step Guide for Succession Planning.