OPINION
Passing the baton: Practical tips for succession planning
T
he cleaning industry has a high concentration of family business owners, and it employs an ever-growing number of people. These businesses not only support the families that established them, but also the families of those they employ and the families of the businesses that they support through their services. They form an integral part of the economy and their unique dynamic means that many family business owners hope to pass their business onto the next generation. Despite this however, research shows that only 40 per cent of established family businesses survive the transition to the second generation. Past that point, 13 per cent will survive to a third generation and only 3 per cent to a fourth generation and beyond. Why is that the case? It might surprise you to know that only one in four family businesses formally consider their approach to succession. It’s no wonder then that so many fail. 62 INCLEAN NEW ZEALAND August 2021
Succession can be an emotionally charged topic that is difficult for families to discuss. While it can be an awkward topic to bring up, the reality is that succession is one of the biggest risks to the ongoing viability of a family business. The proof is in the pudding! So what can be done about it? Unfortunately, there is no silver bullet or quick fix when it comes to succession. Every family is different and every transition is unique. However, by going through due process and tackling these issues head on, you can drastically increase the chance of a successful transition. By putting things on the table ahead of time and creating transparency amongst the family, you can minimise potential conflict down the track. Once the issues are all out in the open, it can also help relieve a lot of the pressure that family members may be feeling. With that in mind, the best thing that can be done in terms of succession is actually getting started. This article outlines some practical tips for you to consider in planning your succession.