Lessons Learned

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     Family dynamics can be another major barrier to contingency planning. Sometimes family members treat each other in business the same way they treat each other in life, Wu says.  “In a family business, everyone wants to be recognized, acknowledged, loved and respected more… One of the big obstacles (to planning) is that so many people avoid conflict because they want to avoid the hurtful, angry feelings.”  Family-owned or family- controlled businesses make up an overwhelming majority of all businesses, he says, yet only 25 percent of them plan ahead.            
     Family business or no, leaders “need to move away from working in the business to working on it,” says Wu.  Helping leaders learn to let go of day-to-day operations in favor of strategic planning is one of his chief roles as an executive coach.  

Transition Plans
     The reluctance to delegate authority links contingency planning to the broader issue of transitioning planning: the designation and grooming of people to take over key company positions in the future.  Hansen rarely works by himself with clients on their transition plans, but rather plugs them into a network of professional advisers likely to include a banker, an estate-planning attorney, a CPA and a management consultant.  A good transition plan requires business owners to consider more than just their goals for their business.  They must also consider their personal objectives within the business, their personal estate planning and the well-being of employees and clients.             
     “The key to all business transition plans is to address a potentially catastrophic event while developing a living plan that addresses leadership, relationships, management succession and development,” says Glassman.            
     A succession specialist’s job is developing in leaders the capacity to implement their succession plans by making it safe for people to tell the truth.             
     “Lack of open expression is a major obstacle to transition planning because (many business leaders) don’t have emotional intelligence,” says Wu.  

A Plan for ‘Frantic Mode Businesses’
     For newer, smaller companies that still operate in what Hansen calls “frantic mode,” such thorough planning is often beyond their capacity.  The businesses still don’t have much value, the personal worth of the partners is not very high and they are working too hard just to keep the company going. But they can institute some contingency measures.            
Continued...

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