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By Gregory Brun

As a business owner and leader of a family business, you may feel that your succession planning is complete upon identifying a family member as the successor to lead your enterprise. However, that is just one step in a successful transition. Creating a transparent and intentional approach to business succession can help in the creation of family cohesion, furnish a roadmap for the next generation and provide a foundation for sustainable business performance for all shareholders. As you think about business succession and transferring ownership to the next generation, there are four critical components to consier:

• Selecting a successor
• Creating business and family governance
• Preparing heirs in leadership and ownership
• Evaluating the economic impact

Perhaps you have founded the business, or maybe you are following in the footsteps of the founder, leading a business as the current steward of the family dynasty. You, or those that preceded you, likely identified a need and an opportunity. The passion for satisfying that need, the skills to solving that problem, the spark of innovation and many years of hard work has resulted in success.

The next leader of the business will require a different mindset. They will need to blend continuity of what the business has achieved, yet will need to take a novel approach to incorporate new ideas and visions. Successors don’t have the benefit of the founder’s inspiration; they are inheriting the dreams of those that preceded them, including your contribution to the success. Their task is to blend that dream with a renewed shared vision representing themselves and other members of the rising generation of family owners. This mindset difference between you and the next generation leader is important to acknowledge; ignoring that difference may derail success, either by not using the strength of the past successes, or at the other extreme, making no changes whatsoever.

You have likely identified (and helped developed) the business skills your successor brings to the business. In addition, you can assist them in developing the mindset of steward/creator. Discuss openly what it means to follow the dream, have them take ownership of it, innovate and adapt it to new circumstances. Strong successors see themselves as creators in their own right. You can be instrumental in supporting this identity and recognizing that the new leader’s function is vital for the strengthening and continuation of the family business.

In addition to developing the right mindset, here are some other considerations to help you evaluate if a designated successor is positioned for success, and not just “taking over”:

1. Fit: Determine the skills and attributes necessary to step in to the leadership role. Do they possess the right mix of both to run the enterprise and be successful on behalf of all shareholders?
2. Readiness: Consider working with an independent advisor to provide feedback to determine what areas need more attention.
3. Key insights: Provide an orderly transfer of knowledge across all aspects of the business. This isn’t limited to reports and advisors you rely on; rather it includes those “unwritten rules” that you have relied on over the years to help in decision making.

Gregory Brun, ChFC®, CFP® is Senior Vice President, Private Banking Advisor at Wells Fargo Private Bank. You can reach Gregory at 614-233-4961 or greg.brun@wellsfargo.com.

Wells Fargo Private Bank is a Goering Center corporate partner, and the Goering Center is sharing this content as part of its monthly newsletter, which features corporate partner articles.