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Family Business Succession Planning Best Practices

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Since 1973, The Rawls Group has been passionate about helping business owners achieve their business succession goals. Nationally recognized, The Rawls Group specializes in addressing the issues that impact the continued success of a business legacy. By partnering with our clients and their other advisors, we work to develop a plan that will perpetuate the leadership, culture, performance, and relationships that are key to business success.

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Family Business Succession Planning Best Practices

  1. 1. “Perpetuating Family Business Legacies Through the Next Generation” Best Practices for Achieving Succession Success™ Continuation of success through the next generation of owners and managers Family Business Succession Planning Advisors The Rawls Group 1.800.777.2957 info@rawlsgroup.com www.seekingsuccession.com
  2. 2. Defining Family Business
  3. 3. “Family Business”  Two or more people gathered together for reasons other than money.  Family is a choice, and often not an easy choice  Family requires both parties to give benefit of the doubt FAMILY BUSINESS  A commercial enterprise that is satisfying and fulfilling the expectations & needs of those critical to commercial viability:: ₋Regulators ₋Creditors ₋Customers ₋Employees ₋Managers ₋Family
  4. 4. Definition of Success The maintenance of commercial viability while fulfilling the personal goals and priorities of those involved in the process.
  5. 5. Definition of Business Succession The continuation of success through the next generation of owners and managers.
  6. 6. Definition of Succession Planning Preparation for the continuation of success in light of inevitable, probable and possible contingencies
  7. 7. Core Values Fundamental to succession planning best practices
  8. 8. Family Business: An Oxymoron  Family: A relationship environment of based upon Unconditional Acceptance  Business: A performance environment based upon Conditional Acceptance You can not run a business like a family and you can not run a family like a business.
  9. 9. The Family Business Equilibrium BUSINESS performance FAMILY acceptance The perfect balance between family and business priorities.
  10. 10. The perfect balance between family and business priorities, is a worthwhile goal but an impossible achievement to maintain. BUSINESS performance FAMILY acceptance There Is No Perfect Family Business
  11. 11. The Metric of Success for a Family Business… How Long it Takes to Regain Family Business Equilibrium
  12. 12. Covenants – The Key to Unity & Teamwork  Proactive, written agreements between critical family members or managers of unequal power that confirm reasonable expectations and provide reciprocal accountability.  More formal than an assumption or verbal acknowledgement but less formal than a contract. COVENANTS
  13. 13. Best Practices for Achieving Succession Success™
  14. 14. Best Practices for Achieving Succession Success™ 1. Respect the Succession Matrix® 2. Lead 3. Grow Family 4. Build your Succession Bridge® 5. Develop and Communicate Your Exit Strategy 6. Create a Performance Culture 7. Make No Succession Assumptions 8. Be the Beacon of Optimism
  15. 15. INVOLVES MORE THAN BASIC ESTATE PLANNING  Owner Motivation and Perspective  Personal Financial Planning  Business Structuring  Business Performance  Strategic Planning  Leadership & Management Continuity  Successor Preparation  Management Synergy & Teamwork  Family Governance  Family Dynamics 1. Respect the Succession Matrix®
  16. 16. Succession is a challenging journey into the unknown that demands leadership. 2. Lead
  17. 17. An effective LEADER is willing to  Define the culture  Defend the culture  Represent the culture  Portray confidence  Achieve trust  Make plans  Express expectations  Offer encouragement  Recruit team members  Demonstrate teamwork  Assert accountability  Consider alternatives  Make decisions  Prepare your successor  Rise above failures
  18. 18. FAMILY:  Is the fabric that brings resilience and strength to the business enterprise.  Is the foundation of teamwork that provides self sustaining purpose, synergy and gratification.  Generates the passions of pride and enthusiasm that enables those with less to do more. 3. Grow Family
  19. 19.  Identify and affirm those (blood and non-blood) who are a part of your business for reasons other than money.  Accept the motivations and gifts of your family  Family is the fabric that differentiates the ordinary between the extra ordinary.  Empower your managers and demonstrate your dependence upon them How to Grow Family
  20. 20.  Identify a successor with reasonable pre-requisites not including blood-line  Confirm qualifications  Prepare and deploy a Successor Development Program  Be a coach not a critic  Give them room to learn from mistakes 4. Build Your Succession Bridge®
  21. 21.  Have a life outside of the business  Acknowledge that your exit is inevitable and be proactive  Establish and respect a reasonable time-line (3-7 years)  Establish an Outside Operating Board of Directors that provides a forum for your involvement 5. Develop and Communicate An Exit Strategy
  22. 22.  Confirm your definition of success beyond dollars and cents.  Create performance benchmarks and SMART goals that support and affirm success definition.  Do not tolerate mediocrity  Establish performance metrics  Demand accountability 6. Create a Performance Culture
  23. 23. “We’ve made it; we’re losing it; we’ve got it done; my kids will work it out; my key manager would never leave me; my son will grow up; we will learn to like our daughter-n-law; my attorney and accountant will take care of that; my family will grow a brain; I can do this; etc. “ 7. Make No Succession Assumptions FAMILY, TEAMWORK , HAROMY AND ORGANIZATION ARE NOT NATURAL BEHAVIORS
  24. 24.  We are family and we are supporting one another on our Seeking SuccessionTM journey  You are critical to our success because everyone has a vested interest in business succession.  The success of the business cannot be greater than the success of the people that make it successful 8. Be the Beacon of Optimism SUCCESSION PLANNING BUILDS VALUE!
  25. 25. Knowledge is Important, Care is Critical
  26. 26. “Perpetuating Family Business Legacies Through the Next Generation” Best Practices for Achieving Succession Success™ Continuation of success through the next generation of owners and managers Family Business Succession Planning Advisors The Rawls Group 1.800.777.2957 info@rawlsgroup.com www.seekingsuccession.com

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