Did you know that only 30% of British family businesses survive the transition to the second generation? Transitions from the second to third generation are even more bleak, with only 10% surviving.

Why is this? A large part of it is undoubtedly a grave lack of succession planning, with just 42% of family businesses having any sort of plan. However, just having a succession plan is not enough – it needs to be effective. Here’s how to make yours as strong as possible.

Why business succession plans fail

Business succession planning often fails because of various reasons, each one acting together to frustrate a smooth handover. Let’s go over some of them and what you should do to avoid them.

Lack of clear communication

Clear communication is essential in succession planning. After all, succession planning is about more than you and your successor – there are a range of stakeholders who need to be kept in the loop, including senior management, key staff, investors and other family members.

If they don’t like the succession plan and don’t have time to input their ideas before it happens, you can expect disagreements, arguments and even infighting.

Our tip: Maintain close and constant communication and information sharing with everyone who has an interest in the succession. That way, disagreements can be amended before the change, while you’re still in charge.

Procrastination when identifying successors

It’s easy to expect a family member, usually a son or daughter, to take over the business after you retire. However, you shouldn’t expect this to be the case – too many do, staying on for longer or having to quickly make another succession plan after realising their child has other ideas.

Top tip: Approach your preferred successor early. They might not be enthusiastic about running the business now, but they may be later on after you’ve planted the idea in their mind. They can also train for the position, study or do whatever else they want to do before they commit to the business.

Family conflicts

Emotional ties and family dynamics can easily cause a success plan to fail, especially in a family of highly ambitious people who all want to be involved in the business. Add into that a lack of communication and negotiation to satisfy everyone’s wants, and your business could easily sink once you’ve taken a step back.

Top tip: Start planning early. Emotions may be high once you name your successor, but given time, everyone should be able to get on board – or ask for their own position that they are happier with.

Resistance to change

Again, your successors aren’t the only people you need to convince of your succession plan – senior management, investors and key staff need to be convinced of your successor’s competency and vision. If not, they may leave, reluctant regarding the change that is coming.

Top tip: Once again, make sure you maintain clear communication with all stakeholders. Also, ensure your successor is up to the task and persuade key individuals that they are. If necessary, you may want to stay on a little longer with your successor under your wing, so stakeholders can experience their leadership while you’re still there.

Lack of contingency plans

An absence of contingency plans significantly contributes to the failure of business successions. While a primary successor might be identified and groomed, they may be unable or unwilling to assume the leadership role. This absence of a backup plan can leave the business vulnerable, causing disruptions in operations and potential instability.

Our tip: Also have a backup plan, be it the sale of your business, transfer to a trusted senior manager, or your continued participation in the business.

Need help with your business succession?

Business successions are difficult, but they don’t have to be stressful – not with us helping you. We’ll work by your side to build a plan that works for you and all parties involved to ensure your legacy lives on once you’ve stepped away.

Get in touch with us to discuss your succession plan.