Prepare your successor

For many enterprises which are controlled by a sole owner, the question arises as to who will carry on with the busi­ness once the owners are no longer able to. Usually the parents have some­one in mind, but the ques­tion is: when must they pass on the reins?

Emotion also plays a big role in the decision.

The owner has probably built up the enterprise from scratch and made a success of it through difficult times.

Giving over to someone else can be a traumatic experience for such a person. Sometimes the owner has spent so much time with the business that he/she has no other outside interests, in other words, there is not much to look forward to.

It is here where most mistakes are made in the transition. The owner is usually uncertain as to whether the person (candidate) who is to take over the business is ready for the responsibility.

If one plans carefully for this transition, trauma and uncertainty can be avoided.

The action

The current owner must sit and write down the skills he/she has that have made the business a success. These usually comprise the following:

Devotion to the enterprise

Passion alone is not enough. A person must have the will and conviction to take the enterprise to new heights. High energy levels and initiatives are basic prerequisites.

Leadership skills

The owner becomes involved in a number of negotiating situations – from suppliers to personnel and customers. He/she must have the ability to negotiate creatively and to decide when an option is viable.

Technical skills

Each enterprise has its own source of expertise -technical expertise from manufacturing to business management. He/she must have experience in all the various aspects.

Financial expertise

In the current circumstances, this is one of the most important aspects of the successful management of an enterprise. He/she must have the necessary knowledge to be able to achieve set goals financially.

Business skills “Wheeler and Dealer”

He/she must be able to identify and utilise opportunities to the advantage of the enterprise. He/she must have strong entrepreneurial characteristics.

The next step will be to evaluate if these skills match those of the heir apparent. If not, formal training must be considered to rectify the situation.

In-service training

There is no training institution, university or business school which can compete with practical experience in business. It is therefore advisable to expose the prospective successor to the same type of business as the one he/she will be taking over. Send the successor to work for a similar enterprise. In this way, a variety of new ideas can also be brought back into the business. For example, the successor could possibly work as a systems manager at one of the national groups. In this way a required sense of responsibility is developed in achieving objectives and the importance of planning and control is realized.

The alternative is to train the successor in the enterprise concerned. The successor will then be able to work in all the departments. The current owner must not budge under pressure from the successor to be treated differently from other personnel or promote the successor to a managerial position prematurely. In the supermarket business there are a saying: “A person must first experience the sound and feel of sugar under his feet and the smell of old vegetables”.

Let the successor complete courses such as the Program in Business Management or Program in Entrepreneurship. The better trained he/she is, the more gradually he/she can take over from the owner.

Obtain outside opinions

Sometimes a parent over or underestimates his child’s abilities. The emotion and pride involved in transferring an enterprise, which a parent has been putting his efforts into for so many years, to one of his heirs, may blind him to the successor’s shortcomings.

Talk to outsiders, especially acquaintances, who know the successor well. One could even speak to some of the more trustworthy and senior personnel about the matter.

As soon as the current owner decides to appoint a successor, there should be constant communication with personnel in order to avert any fears.

Eventually the parent must take the responsibility to give the reins to his successor. The owner can only hope that it was the right decision so that both the ideals of the enterprise and the heir will be realized. The parent must also express his trust by standing back and only get involved as mutually agreed upon. Be a mentor!