If you look up procrastination in the dictionary, it says, “to put off intentionally and habitually or to put off intentionally the doing of something that should be done.” So not surprisingly, we frequently see founders and business owners delaying the next generation transition process until some triggering event happens. As I mentioned in my column last week, procrastination is one trait that is so uncharacteristic of entrepreneurs. After all, practically every element of their lives, from the extraordinary and never say die spirit that brought them to where they are and building successful companies from nothing to expanding their wealth all the way to inspiring and leading the hundreds or thousands of employees, are testaments to the fact that they not only know how to get things done but are aggressive and determined to a degree far beyond the average.
Sadly, when it comes to the succession of their businesses, especially the transfer of power to the next generation, the majority of family business owners put off the steps necessary to plan ahead. For family-owned businesses that were affected, last year has been like no other. It will likely be remembered around the world for the devastation and loss of life caused by the Covid-19 pandemic. Since March 2020, every person on the planet has had their life shaken by the pandemic in many ways. And in the midst of the challenges, there’s been the profound sense among business leaders that this period has helped them evaluate their lives and focus on what’s truly important. So if there is any consolation, the pandemic has helped them find deeper meaning in the way they run their businesses.
Is this the day that I’ll be infected with Covid-19?
With news of so many family and friends dying from the virus and months of lockdown that have hammered many companies, many key business leaders have now realized and reflected on life-changing questions that stress how incredibly fragile and delicate life is, that it does not wait for anyone. One event can alter a lifetime of achievement and rob us of those things we want dearly. As founders of businesses, we are haunted by this question, “Every day I wake up and wonder, is this the day that I’ll be infected with Covid-19?” I am raising more disturbing but real questions related to the fate of the business if something tragic happens to the key decision maker. Hopefully this will make them act while time is still on their side.
- What would happen to my business? To my employees? To the ongoing projects?
- Who will deal with my creditors? How will my family pay for my outstanding debts?
- Who will take care of my family, especially my grandchildren?
- How would this affect my children and their respective families?
- Will there be conflicting priorities for the business as well as confusion among family members as to who will assume leadership?
- What will happen to my other partners? Will they exit when they find out?
- How will my family make important decisions?
- Who among the family members will run the business when I’m gone? Is my wife capable?
- How much is the total value of the business now?
- Are my children ready to assume a higher responsibility?
- As heirs, what will they do with their inheritance?
You probably expect your business to provide for your family when you die, but don’t ever think that leaving a war chest to your family guarantees their financial security. Your sudden death could see your loved ones and your business suffer. You will make them inherit a sea of confusion leading to devastating consequences. This is aggravated by the fact that you won’t be around to clarify, defend or resolve the confusion.