GGFL COVID-19 Commentary Week #8
COVID-19 has pressed the pause button on long-term decision making in much of the business community.
Many small and medium sized businesses that were thriving, or at least experiencing healthy growth, are now struggling as they navigate this current crisis.
High level decisions being contemplated two months ago have been overtaken by bread and butter considerations such as how to keep valuable staff members and – arguably more important – how not to have lost them permanently when the crisis ends.
I know from speaking to clients that this crisis has also caused some deeper reflection, especially among those who have been considering retirement and passing the company torch to others.
The reverse is also true.
People contemplating buying into, or taking over a business, might be questioning the wisdom of the decision. How much is it worth now as opposed to pre-COVID? Does it have a future? Would my money and energy be better placed elsewhere?
There is no way to sugar-coat it. The situation for most business owners and their employees is dire but that doesn’t necessarily mean that the hopes and dreams that were very much alive earlier this year, will never return.
And for those who have founded and grown a business, those hopes and dreams often involve seeing the next generation carry the business forward.
Which is why succession planning is so important.
Those who have been through the succession process – and those currently going through it – will know that it can be long, complex and often emotional.
To any business owner contemplating succession, I would say this: Look at what this crisis is teaching you. How is the person (or people) you considered leadership material coping? Has someone else you hadn’t considered a candidate emerged from this a better leader
So what to do?
The benefits of careful succession planning are many: No surprises, no expensive, ugly family legal battles over a will and, hopefully, happy and contented beneficiaries who all feel they have been treated fairly.
Before that (hopefully) happy conclusion, there are invariably difficult conversations about who is inheriting the business, and who is inheriting the associated built-up wealth, and who is not.
It’s never too early to start the process.
For example, if COVID-19 has persuaded a business founder that he or she would like to retire earlier than originally planned, the succession process can begin with an informal chat before any family members become involved.
The challenges can be as varied and complicated as any imaginable family dynamic.
Perhaps there are several adult children to consider. What if one or two have no interest in the family business and the others do? What if the pandemic has deterred the designated heir-apparent from taking over the business?
What about spouses of the founder’s children, or blended families where children from previous marriages are part of the equation?
Ottawa is a real-estate rich city and real estate accounts for a large portion of the business community’s privately-owned wealth. So if an adult child has no interest in being involved in the family business, he or she can inherit a portion of real estate instead.
With succession planning, there is no one-size fits all solution. Some transitions are relatively smooth, others tough and heart-wrenching.
So yes, many major decisions are currently on hold for a business community beset by uncertainty but the pandemic and its exhausting, stressful impact, will have expedited many personal life-plans.
There is life after business, but if the business is to live long and prosper, the better the succession plan, the better the prospects of continued success.
Deborah Bourchier is a GGFL partner and a specialist in succession planning.