“That’s not how it works. That’s not how any of this works” – from the “Beatrice” Esurance commercial
So, I was having a conversation with a good friend of mine who (like most people I know) is much smarter than I am. He said he read my blog and actually found some of the advice I offered helpful (that is not why I called him smart.) He then offered me some advice of his own. He claimed that some of his best ideas came not from what to do but what not to do. He had some theory that many of us never advance from adolescence when we do exactly what we are told not to do… it seems that remembering that is easier than keeping track of Gibb’s rules (a little shout out to my fellow NCIS friends.) So, I looked at my practice and realized since most of my time is spent fixing situations where people did what they should not to do, I thought it would help list my top 5 “pitfalls.” I am sure even Beatrice would appreciate them. Here they are in somewhat descending order of importance:
Number five: getting advice from too many people.
Since this is not an exact science, it is tough to determine what the right answer is or when you know if you have done the right thing. So, everyone who realizes you may face a succession planning situation feels free to chime in. From barbers to friends to business colleagues, everyone has a point of view often accentuated by a success story. Truth is, this is a process and like nuclear (or nucler) energy, it can power whole cities OR destroy them. It is fine to listen but please entrust any actions you take to advice from the pros.
Number four: blood is not always thicker than water.
The oldest sibling; family over a faithful management member – these are standard defaults that many owners follow. The emotion of continuing the family often outweighs an objective view of who is really the right person to succeed you. While it might be fine to follow this idiom in personal family matters, using it incorrectly in a succession plan can result in economic harm to those closest to you.
Number three: Not considering all of the big three – family, ownership and management
The best starting point here is to put some governance around your process. This will help ensure you keep the concerns of all of these “stakeholders” in mind.
Number two: Getting the math wrong
Two maths here; make sure the size of the “pie” is understood by all and never take your 100% voting control and leave it to two siblings in equal shares. This is probably the one pitfall we spend the most time trying to fix.
Number one: Waiting too long to get started; perhaps never getting to it until it is too late.
The good news here is you wait too long and you never face the problem; the bad news is the rest of us do and sometimes are acting in a void without the benefit of your insight.
So, please, though it may not be a burning platform today, get started on the process and avoid some of these pitfalls. Trust me, you will find it well worthwhile.