Gerald Levan spent years as a trust and estates attorney, representing large family businesses with big-time personal problems.
He saw first hand the struggle associated with handing off the family business and found that sloppy succession planning by one generation almost always led to problems for the next.
Today, 10 years after dropping his law practice in favor of family business consulting, Levan half-jokingly refers to himself as a “recovering lawyer” and has written a book titled “The Survival Guide for Business Families.” It has struck a chord with many business owners, who Levan says have told him that, at times, they see a little too much of themselves in his characters.
“It’s no family in particular, but it’s every family,” he says of his account of a family business facing change. “Many people who’ve read the book say, ‘You’ve been reading my mail.’”
Later this month, Levan will travel to Cleveland from his home base of North Carolina to share advice with law and business students at Cleveland State University. In the meantime, he offers his take on four common mistakes business owners make when it comes to planning for the future.
1. Procrastination
Levan says members of the senior generation should sit down in their mid-50s and start seriously thinking about the future of the family business so the process is not rushed.
“They need to talk about it as a family and need to plan while all of the players are healthy and functional,” says Levan. “The worst thing that can happen is that the business leader dies or becomes disabled suddenly, and with all the grief and anxiety, they have to worry about the business.”
2. Denial
The only thing worse than putting off drafting a succession plan is avoiding the process altogether. Levan has seen many people simply ignore the matter until they can no longer escape its reality, which is never good for anyone involved.
“They are concerned about creating unpleasant conflict,” explains Levan. “It’s human nature that if it isn’t banging on your door, leave it alone, maybe it will go away. These are not the kinds of things that will go away.”
3. Sticking to the numbers
Too often, Levan says, people put more weight on the accounting side of the process than on the personal side.
“We recommend that it be intergenerational and include the people in the business as well as the people outside of the business and the spouses and children at least 18 and over,” he says. “Now, you don’t do this all at once, but it’s very, very important that the family communicate.”
4. Misjudging the challenge
Just because you can get orders to your customers on time does not mean you can easily tackle the challenge of planning the future of your business. Levan says business owners don’t realize that dealing with the different personalities within a family is much different than leading a successful business.
“The skills to get the family through transition can be different from the skills necessary to get the stuff out the door, make a profit and run the business day to day.”
How to reach: Gerald Levan, www.levanco.com
Jim Vickers ([email protected]) is an associate editor at SBN.
