A smooth transition from one generation to the next is one of the most important features in a family-owned business. A well thought out succession plan can help prevent a legacy of financial disasters and legal battles.
Colorado State University’s Center for Entrepreneurial and Family Enterprises, recognizing the importance of this issue in today’s family businesses, is conducting a workshop and seminar titled "Family Matters."
Preparing the Family for Succession." The session will be held from 1:30-5:30 p.m. May 18 in Room 123 Ammons Hall.
"When Bob John Magness died of lymphoma in 1996, he had created one of the nation’s largest cable companies, Tele-Communications, Inc. Unfortunately, what he had not created was a succession plan. The legal battle which ensued was splashed across the country’s major newspapers and business journals," said Anne McCarthy, director of the center and a professor of management in the College of Business. "This is a good example of what can happen when a family-owned business doesn’t have a succession plan in place."
For a family succession plan to work, more than just family members have to be considered, McCarthy points out. "Key business associates such as suppliers, bankers and customers have to be included in the transition plan from one generation to the next."
While 30 percent of family firms survive the transition to the second generation, only 10 percent survive to the third generation, according to McCarthy. For this reason, the passing of the business from one generation to the next requires some guidelines, planning and communication to sustain the health of the firm. Over the next 10 to 20 years, about $7 trillion will change hands as founders of family business firms retire. Most family businesses want to keep the firm in the family, but creating a succession plan is not often given the priority it should.
The workshops provide an arena for participants to engage in constructive dialogues that address issues key to family businesses. It is a practical educational format built on self-assessment and action planning by the family attendees. It also creates an environment which allows family business owners to network.
"We encourage more than one person from the family to attend," McCarthy said. "Having two generations participate in the program can be very productive, and including family members and key business managers can help facilitate communications and work toward resolving issues and generate new ideas."
Workshop sponsors include the Everitt Companies, Family Business Consultants, and BankOne.
For more information, contact Courtney Harms at (970) 491-6876.