Business Control - Perils Of Succession
Each of our last three clients had issues that could be traced back to their previous family members ownership. All too often the preceding owner is a strong person, respected in the community, respected within the business, and they are the CONTROL. The problem is that since a person is the control, he or she determines what good is for the organization. Thus, problems can be covered over by them saying, I’m already successful and I must be doing it right, and the successor family member begins to learn a dangerous method of management.
Each of our clients were historically “successful”. Each experienced frustration with the successor family member. Either “they just weren’t up to it” or “they aren’t doing what we did”, therefore leaving hundreds of thousands or millions of dollars “on the table”. Upon review, the structures and individual employee accountability to “minimum acceptable standards” of action, results, and reporting were never established. Information was generally wrong or incomplete or unfocused in form to the real problems and controls of the company. Without correct information, the successor was “flying blind”, and more importantly and disastrously, was attempting to rapidly expand the business. The concept was not wrong. However, without accountable structures in place, the company simply lost more profit while revenues increased. The attitude of, “We’re making money, so it must be good” and “It is just a matter of more revenue to be great”, is just a rehash of the old style of management which the successor believed did not work.
Prior to turning over your business via buy-out or gift
Anthony Burruano, owner of Burruano Group, the world’s foremost construction consulting company and firm, combines over 30 years of small to medium sized business experience in both financial and operational areas, mergers and acquisitions (international and domestic), and turnaround planning and consulting for the construction, manufacturing, distribution, service, and retail business.
For more information on Business Advisory and Consulting please visit the Burruano Group website at: http://www.burruanogroup.com
Tags: business succession, family business, family company, family owned business