The waiting game

We all know that entrepreneurs are notoriously bad at success planning – it’s simply one of those issues that gets pushed in to the background when you’re busy running your business.

In the last 12 months, it appears that succession has fallen even further from the thinking of business owners, with surveys from PricewaterhouseCoopers and PKF Chartered Accounts & Business Advisors showing that the majority of business owners have no intention of moving on in the next few years.

Fair enough, you might say. These are difficult times, and what company wouldn’t love the chance to benefit from the experience of its founder or long-time manager?

But this succession suspension could well create a few problems down the track that entrepreneurs will need to be aware of and manage carefully.

The first is what Andrew Kesik, partner with PKF, calls the “Prince Charles effect”- that is, where the heir to the throne (or in this case, the CEO’s office) is forced to wait and wait and wait while the Queen (or business founder) delays their succession indefinitely.

Managing the expectations of these princes and princesses is not easy. While they can probably understand why the founder is unwilling to step down at such a difficult time, it is also essential for would-be leaders to learn about managing in good and bad times.

Indeed, founders may be leaving their businesses worse off in the long run by not exposing their successors to the experience of managing in a downturn.

The other problem is for founders for whom selling the business is a key part of the succession plan. With many entrepreneurs hanging around, it seems likely that we are going to be facing a glut of businesses sales and owners rush for the door at the same time.

Picking the right time to put a succession plan in place is tricky at it will be different for every business. But entrepreneurs must realise that a clear, well-articulated plan is vital for managing the expectations of those who will take the business forward.