Lisë Stewart Discusses the Impending Crises Facing Small Family Businesses Everywhere, and How We Can Divert it With Effective Succession Planning
1. When did you start your business career?
I started my first business 28 years ago, but the highlight of my career has been the founding of Galliard in 2004. It is the culmination of all of my years of experience and, more importantly, it is made up of a great TEAM that shares the same mission, vision and values.
2. What attracted you to helping family businesses plan for succession?
Leadership development and planning for succession have always been a core element of our practice, and about 10 years ago we noticed a significant gap in the market – small businesses weren’t getting access to the help that they need to prepare their businesses and their families for the future.
3. Why not?
Three reasons: owners reported that consulting services were too expensive, they didn’t know where to turn for help, and the effort needed to coordinate all of the aspects of succession and estate planning was too daunting.
4. How did you fill this need?
This was a perfect niche for us. We could provide low cost, easy access services that produced high value by leveraging local talent and user-friendly materials.
5. What percentage of companies pass leadership onto the next generation?
About 80% of US business owners report that they want to pass to the next generation, but only about 30 to 35% are able to do so.
6. What is the likelihood they will succeed?
Depending on the data source, the numbers are either low or really low! Approximately 2 to 3 years after a transition has occurred, less than 20% of businesses report that the transition was successful.
7. Why is this percentage so low?
Again, it is often an issue of planning and information. Sometimes owners will be convinced to sell their business when it just isn’t ready. Eager business brokers may suggest that succession consists of merely finding a new owner – but this is rarely a recipe for long-term success.
8. How often do family members end up in litigation because there was no plan in place?
It is hard to put a figure on this, but even if litigation is not the result, rifts in families that result in severed family ties and lack of communication and trust is a disastrous result. With a good plan and open lines of communication this doesn’t have to happen.
9. How many family business owners have a succession plan?
Less than 15 percent. An owner may have identified a successor from within their family or management team, or have decided to sell, but these options don’t constitute a succession plan.
10. What common mistakes do owners make?