Henry Ford started the Ford Motor Company in 1903, and it became wildly successful by mass-producing safe, affordable cars. Edsel, Henry’s son, and the new CEO, ushered in a new age with a new approach. During the Great Depression, he tried to replace the Model T with a more modern design aimed at high-end and foreign markets. Later, he made a deal with labor.
Henry, however, was unable to let go of Ford’s backstory and constantly undermined his son. As a result, revenues dropped and the company was on the verge of failure by the 1940s due to years of labor unrest. Henry Ford II, Edsel’s more aggressive son, single-handedly averted bankruptcy for the automaker.
This story shows how important it is to build a successful business and ensure that it continues to exist after you. And in this text, we will try to give ideas for exactly that.
Start with the basics – a detailed succession plan
We can’t help but start with some really basic but also really important things that every entrepreneur should know.
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Succession planning is important for you and your business because it can help you reach your financial and personal goals, protect your retirement income and standard of living, keep your family together and preserve your legacy, prevent family feuds and business problems, and give you peace of mind.
Succession planning can help your business keep its edge and reputation, keep loyal customers and employees, keep operations going smoothly, encourage growth and innovation, and attract new investors.
So, you should find a friend who cares about the future of your business and train them to be your second-in-command. If you and your second in charge suddenly couldn’t run the business, you might want to think about training a third person to do so.
Because a business has so many moving parts, everyone involved needs to do their best to train the people who will finally take over. If the company didn’t have a well-thought-out succession plan, the workers, the product, and the customers might all suffer.
Here, we need to say something very important: choosing a successor or a buyer for your business is just one part of planning for its future. Succession planning is a strategic, all-encompassing process that involves lining up your career and personal goals, taking stock of where you are and where you want to go, and making a plan for how to hand over the keys.
If you’ve never done it before, developing a succession plan might be a daunting undertaking. However, you can use a few simple steps as a roadmap to success. Setting goals and a deadline is the first step.
Think about your goals for the future of the company, as well as the timing and structure of your exit. Think about the worth of your company, your health, your finances, and your family as you assess your personal and professional circumstances.
Analyze the environment around you
A successful business transfer is also particularly dependent on the context of the time in which it is made. There is a huge difference between thinking about successors in the early 20th century and in 2023. Analyzing the current business environment, the economic climate and the specific risks is, therefore, an essential part of planning.
To give you an example, in the 1960s, a Bulgarian-Russian immigrant opened a store in East Germany (GDR) that sold radios, TVs, and other electrical goods. The business did well, and the owner set up a shop to fix the machines. In the best years, 60 people worked for the company.
As things started to change and the Berlin Wall came down, big hypermarkets started to move into East Germany and slowly put out of business the smaller shops. In the early 1990s, the immigrant sold the business at this point.
If the business environment back then was directly affected by a political event from the past, like the union of two countries that had been separate for decades, the business environment today wouldn’t be any easier.
Building trust – important, difficult, and a new way
Recent global research from consultancy PwC shows that one of the biggest challenges facing family businesses globally is building trust:
“As family business owners, you understand that your success and your advantage over the competition is, first and foremost, built on trust. But today, the very nature of trust has changed. (…) you need to be trusted not only by your customers but also by your employees, family members, and the general public. (…) There is a new formula for building trust, and the stakeholder groups you need to be trusted by have expanded”.
Businesses will have to think about new groups of users who get their information in very different ways and have different ideas about what makes people trust you. When it comes to these new ways to build trust, family businesses will have to do a much better job of both showing and saying. They will have to make their efforts more obvious and let their partners know what they are doing.
You can see also Altoo’s article on how the richest man in Asia is preparing his financial legacy
