An invitation for irrecoverable loss: A delayed succession planning

By SOCH Business Mentors LLP Posted June 28, 2022 in Family business

An invitation for irrecoverable loss: A delayed succession planning

Why do family businesses in India suffer to the point of their extinction or irrecoverable deterioration when placing a rightful successor?

Why do most UHNI and HNI families even accept a painful, heart-wrenching, and gut-wrenching experience, despite succession planning methods, processes, and transitions available to them?

Too few family businesses admit to accepting the pain of business extinction and deterioration of family ties. And they do not follow a remedy in an objective, method-rich, and proper way to serve their family mission for generations to come.

We have saved a few from the above experience, and we learned that it’s an alarmingly crazy & counterintuitive reason that creates a painful experience for all living and future family members as well. The reason is no less than shocking. They attempt to avoid pain!

Yes, you did not misread this irony, but an extreme avoidance of pain creates permanent pain in the family’s lives. The planning for a successor entering a business to lead must be a process that is timely, objective, constitution-led, and robust to secure the family’s glory, stature, growth, and love ambitions.

But it isn’t the case for hundreds and thousands of families in India.

One of our clients began speaking to us when their kids hadn’t entered their businesses but were about to. The renowned company had done a great job together with three brothers who began the business together and grew it to a national level.

Their five children, the eldest age 21, joined the business and other children of theirs joined sooner within two years from the eldest of all children (seven cousins) among the three founding brothers.

We saw them around six years back when they were young, and few were just married, and most weren’t.

Today, the family has not formally put charge and decided on the successor in ways to serve the mission of the family in objective ways. From the time we first met to today, they have avoided the pain of succession while everyone now in their hearts is living two or more lives. This is causing a lot of cold wars among every member, including women of the family, and it is yet super silent. Everyone is hurting themselves in this silence, thinking they don’t want to hurt others or be called out as the wrong person who speaks away, but in the end, you know where it goes.

The only thing that has helped everyone is their knowledge of how much money they have. Sufficient that they don’t have to worry at all for two lives! They have riffs, diseases, emptiness for each other and much more. But then they are compromising living for their lives.

Fortunately, three of the members called upon us to help after these many years. Now, it is like they are in ICU and need help. One remark I heard when one of the three said we lost a lot more than we can ever gain. We may have considered this when you recommended us to begin our journey on succession planning and related matters.

Yes, the ICU makes the case compelling. Compelling Enough that whatever amount of money they spend, they would because now they have logic in paying ten folds of the amount that once was the case had they even started eight or five years ago.

But this is what we have lived all our lives here that don’t say unless there is an event that demands radical actions. We believe in creating a situation that makes such a compelling case for investing in family services.

To avoid irrecoverable loss scenarios as above, I recommend that all our prospects and clients make it a priority to act on time for succession planning. Focus on your inclusive approach that is constitutionally approved where everyone has not only signed, but they have created it to live at will.

Take it head-on. Respect the head-on taking. You are doing a favour to yet-to-be-born kids and wives to come yet in the family to grow your dynasty.

We recommend that you stop avoiding the pain. Avoiding pain is critical for making family businesses thrive for generations with ever-present harmony, love, and flow of abundance.

Even if the succession plan includes a model shift from family-owned & run to family-owned & professionally run family enterprise, you got to consider the same method applied differently.

The choice is yours as always. Make it.