Made in Taiwan: Lessons in succession planning
Over the past few decades Taiwan has experienced strong economic growth, which has led to the formation of a large number of family-owned SMEs. As the owners age, planning for succession should be high on the agenda, but only 30% of these companies have a plan.
The problem with not having a plan is that you leave yourself vulnerable to circumstance and the fickle fortunes of luck. Take the example of Sabrina Fashion, reported recently on the BBC website. When Joyce Chou was 44, her father died from cancer and her mother fell ill and was not able to run the family business. Reluctantly, and not wanting to disappoint her mother, Joyce agreed to take over the business despite having previously dismissed the idea of working there at all.
Fortunately for Sabrina Fashion, Joyce has overcome the many hurdles of taking on the family business, which now has 11,000 employees and turns over $250m. Sadly this is not always the case and many businesses that are simply handed to the next generation fail because of a lack of skills or a lack of passion for the business.
So what’s the answer? We would always advise clients to plan for succession and to plan early, don’t wait until you’re ready to retire, or you’re ready to move on before you explore your options. As I discussed in one of my previous posts “Succession planning – who can take over your business?” – there is always another option than just closing the doors and switching off the lights.
There are three things that I would suggest any business owner should consider today that will help you prepare for succession:
1. How reliant on you is the business? While most SME owners don’t have the luxury of replacing themselves fully within the business, there are steps you can take to de-risk your involvement – for example; document processes, where possible document knowledge or train others within the business, ensure day-to-day client relationships are held across the business and not just with you.
2. The family or employees issue… This can sometimes be a difficult question to broach, with many sensitivities to bear in mind. However, I would encourage you to grasp the nettle and make sure you are clear on whether any family member or employee would want to, or would be capable of running the business as this will influence your entire succession plan.
3. What do you want to do? Sometimes business owners can be so focused on the business they don’t take time to consider what the rest of their lives should be, until it’s late in the day. Being clear on your own timescales, goals and future plans doesn’t mean they can’t change and adapt, but it does mean that when the time is right there’s a better chance you will be ready for it.