By: Joe Myers July 18, 2016
By: Joe Myers July 18, 2016
By: Tariq Khokhar July 18, 2016
Source: World Development Indicators
By: Joe Myers February 29, 2016
By: Yoriko Yasukawa July 11, 2016
By: Lisa Evans August 03, 2015
Handing down a family business is a dream of many entrepreneurs who want to see the business they started thrive in the hands of the next generation. But, statistics show that succession can be riddled with challenges. Only about 30 percent of businesses make it to the next generation. Wendy Sage-Hayward, a Vancouver-based family-business consultant, says although many families may want to pass down their business, the succession process is often not carefully thought through enough to make the succession successful.
Avoid holding the reins too tightly.
Founders have a tendency to hang on to control, not allowing kids to have enough say or enough investment in the business. “The entrepreneur typically does have a fairly strong control-oriented personality,” says Sage-Hayward. Entrepreneurial characteristics tend to be very independent, autocratic and wanting things to be done in a particular way. It can be difficult for entrepreneurs to let go of those tendencies, but Sage-Hayward says that’s exactly what needs to happen in order to have a successful succession.
Just because your last name is “Jones”, doesn’t mean you should automatically get a seat at the Jones’ company’s boardroom table, says Sage-Hayward. She recommends entrepreneurs set expectations around how kids will get to participate in the family business. Often, kids will be encouraged to go outside the company for work experience and education so they can bring those experiences back into the family business.
Build skill sets of the next generation.
One of the biggest mistakes Sage-Hayward says she’s seen in family businesses is that the founders have been so busy working in and building the business that they haven’t spent the time to work on building the skill set or engagement of the successive generation. “Working on the business means you’re developing the next generation, engaging them, helping them get the kind of skills and capabilities that they need to take it over,” says Sage-Hayward. Building stewardship in family members means holding regular family meetings to involve other family members in the key conversations so they understand the ins and outs of the business and are prepared to take it over when the time comes.
Consider whether the next generation wants to be part of the business.
Sometimes founders have a dream that their children will take over the family business, but the children simply aren’t interested. Sage-Hayward says this often happens when the founder shuts out the family from the day-to-day interactions of the business or is so busy building the business and not spending time with their families that the kids begin to resent the business and want nothing to do with it when they get older. Involving kids in the business at an early age in a positive way is the best way to ensure kids will be enticed to join the business later on. Having discussions about what childrens’ aspirations are and how the family business can help them to achieve their goals is also important. “Succession planning isn’t an event; it’s a process,” says Sage-Hayward. “And that process starts from a very early age, building work ethic, building the understanding of the business and building the mindset.”
Be prepared to let go.
Ruling from the grave is one of the worst mistakes entrepreneurs can make when handing a business down to the next generation. Trying to set up structures that will control what the next generation can do rather than allowing them to run the company will only cause leadership ambiguity and create a stressful work environment for those family members who are left to run the company. Founders should be emotionally and mentally prepared to walk away from the business completely when the time comes around.
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By: Deepak Malhotra April 14, 2016
It’s one thing to lose a deal because you were playing hardball. It’s an entirely different — and more frustrating — situation when the other side is rejecting even your reasonable offers. When genuine attempts at negotiating in good faith are failing, you need a new approach — but it doesn’t mean you have to get aggressive. The key to success is understanding why people will sometimes reject even fair or generous offers.
You didn’t justify it
It’s not enough that you tell them what you want; you have to explain to them why it is a legitimate request. No matter how reasonable your proposal may seem to you, if you fail to justify it, there is a good chance it will be ignored or rejected. I always remind my students and clients: Don’t let your offer speak for itself; tell the story that goes with it. If you want an exclusive negotiating period, why is that appropriate in this case? If you need more time to consider an offer, why should they agree to change the deadline?
You didn’t help them sell it internally
The person on the other side of the table might agree that your offer is reasonable, but they will still reject it if they can’t sell it to others in their organization. You might deserve a higher salary, but how will they explain this exception to others who are not getting one? Your job is not simply to convince the person you’re negotiating with, but to help them be an effective ambassador for you when they are speaking to their boss, their board, their partners, or others who have a say in what happens. Keep an eye on all of the people who can influence the negotiation on their side, and help craft a narrative that will allow them to get the buy-in they need.
You didn’t respect their constraints
They agree that your demands are reasonable. They can convince everyone on their side that you deserve it. But the answer is still no. Why? Sometimes the problem is that their hands are truly tied on key issues. They would be willing to give you more time to make a decision, but they are facing their own hard deadline. They would be willing to give you more money up front to seal the deal, but they have budget constraints. The key is flexibility: If you give the other side more than one way of improving the offer, it is possible that they will be able to find a way to do it. This is why I remind my students and clients: the more currencies you allow someone to pay you in, the more likely you are to get paid.
You didn’t help them save face
People will often reject even fair and generous offers if accepting them will make them look bad. If the other side has promised their audience (e.g., a boss, the media, their constituents) that they will be able to get a great outcome, and now the best they can deliver is considerably less, they might walk away from the deal even though doing so is costly. The key is to never force people to choose between making smart decisions and saving face. For example, even a symbolic concession on your part that gives them something they would not have otherwise expected can help them declare victory to their side — or at least help them show that all sides had to give in.
You didn’t offer closure
Why should they agree to one of your requests if this will just embolden you to make more? Why improve their offer if you will just shop it around to get other competitive offers? One concern people can have is that even agreeing to your demands will not seal the deal — and this can make them unwilling to expend the time and political capital to make the changes or improvements you are proposing. If it is genuinely the case, it can help you to let them know that “this gets the deal done.” Or, if you still need time, you might be able to at least assuage some concerns by letting them know that “we would accept that as your final offer.” The thing to remember is that you don’t always need to make a substantive concession in exchange for the concession you are asking. If they are worried that you are still shopping around, or that you will continue to pick apart the deal, even an assurance of closure can be traded for substantive concessions.
By: Harold James July 01, 2016
By: Umar Serajuddin June 30, 2016