Graphic Arts Magazine July / August 2019 | Page 34

Column The succession planning dilemma: selling versus leaving your business to your family Across Canada, our industry today is characterized by hundreds (if not thousands) of family-owned businesses. They’ve endured and have become an integral part of their local communities. They’ve served with pride, dignity and a genuine desire to go above and beyond when it comes to service – not only to protect their family name, but also their unique brand. For these busi- nesses, intelligent succession planning can sustain their company and keep it profitable in the future. But few family business owners are doing a good job preparing to turn their shops over to their sons and daughters. No matter how accomplished the children, there may be questions about whether they can run the business as effectively as their parents. Most family print shop owners find themselves so involved in day-to-day operations, that they’re not giving succession planning a second thought. Without it, the business impact could be disastrous and family members can end up having heated disagreements and even legal issues that could ultimately tear them apart. If you’re a shop owner, the earlier you can start planning for 34 | July / August 2019 | GRAPHIC ARTS MAGAZINE a family transition, the better. Experts tell us that you need at least 10 years (yes, a decade) to properly plan for succession. Why? Well, there are several reasons – not the least of which include estate planning, taxes, liability, ownership, voting rights, management training and much more. Many of the pitfalls are unforeseeable. Then there are family dynamics issues. Which child will be chosen to take over and will there be sibling rivalries or jealousy? Does he or she have the necessary experience, expertise, work ethic, business acumen – and above all, desire? According to a PwC (Pricewater- houseCoopers) 2016 survey of family businesses, of those expecting to change ownership in the next five years, only 52% plan to keep the business in the family, down from 74% in its 2014 survey – and the lowest number since 2010. Of the family businesses expecting to change ownership more than five years into the future, just 69% plan to keep their companies in the family, compared with 79% in the previous survey. Get an objective family business advisor Across the board (assuming that your children are interested in owning and running your family business in the first place), you should seek out an objective family business adviser to help make the succession both smooth and successful. He or she can objectively point out the advantages and disadvantages, and be especially helpful in drafting the necessary succession documents. Or, partner with a firm experienced in the intricacies of succession planning. According to PwC, just 23% of family firms have a “robust, documented plan.” Here’s another issue quite common in our industry that’s dominated by middle-aged and older males. Once you do hand over the company to your children, please, please, please let them run the day-to-day operations – not you! Sure, you can be on the sidelines ready and willing to give advice, but your children actually need to make some mistakes, learn from them, and ultimately figure out how to do things their own way. Finally, the best family succession scenarios have come when every family member involved in running the business partici- pates. Never fall victim to “picking favourites.” As family business consultant, coach and author David Bork said in his helpful book The Little Red Book of Family Business: “Succession is about continuity of the business as a viable economic unit, not who sits in the corner office. But he also added, “It is possible that a non-family professional is the best person to sit there.” This brings us to our next, and currently more popular option – selling your business to a non-family third party, which we’ll explore in part 2 of this feature in the September issue. Tony Curcio Editor, Graphic Arts Magazine [email protected] graphicartsmag.com