Succession Planning for Your Family Business

Family businesses can be incredibly rewarding and fulfilling for all involved.

From growing up and seeing other family members work hard each day to joining a family business through marriage, there’s a lot of pride that comes from having a stake in your family’s business and helping build that legacy.

But what happens when a family member decides it’s time to retire? Or change direction in their career? How will the reins be passed down to a new generation? That’s where a succession plan—an absolute necessity in any business—comes in handy.

Intended to outline essential factors and the appropriate individuals needed to ensure a smooth transition within the business when the time comes, succession plans are typically developed by a company’s current leadership team.

Some basic tips for creating your own succession plan:

• Don’t wait—plan early. When it comes to planning, don’t procrastinate until it’s too late to come up with a tailor-made plan that works for your specific business.

• Identify necessary skill sets and team members. Determine essential traits your potential successors should have and base their role in your plan on those skills, along with their level of experience and commitment. Not sure if an employee is looking to grow with the company? Ask. Unsure if your children, for example, are ready to work at the company for the first time? Suggest they work or intern elsewhere first to gain outside industry experience.

• Be transparent, clarify roles and offer professional development, if necessary. This includes determining who has specific decision-making authority and leadership responsibilities—in addition to when this transfer of power would occur. Involve all relevant parties so nobody is left in the dark.

• Expect the unexpected. Having a contingency plan (or two) is wise, considering you never know when the unexpected can happen due to illness, death or other life-changing events.

• Bring in the professionals. Legal and financial considerations are best left to the pros, so know when to bring them in! You’ll be happy you did when the time comes. They can also assist you in getting your plan down in writing and safely storing the information, along with ensuring those who are meant to access it, can.

Marcie Ellison Outerbridge, General Manager and Owner, Ellison Travel and Tours Ltd., knows first hand the considerations that come along with succession planning for a family business. She began working for her father Doug’s company (which was founded in 1980) on and off during high school and tour-managed for the first time while in college.

“I had my own ambitions to travel and moved from the Toronto area to Vancouver for my first job and eventually found my way back to working for Ellison while based in Vancouver starting in 2004,” recalled Ellison, who jumped in and focused on growing the company’s operations in Western Canada. “In 2019, my step-sister and her husband—Michelle and Paulo Branco—decided to join the business, as well. Since COVID, we’ve taken over as owners.”

The pandemic of course put a damper on many people’s original plans.

“Originally, we had about a three-year plan for Doug to mentor Michelle, Paulo and I,” Ellison explained, noting three years ended up being closer to five. “My dad is now ‘Chairman and Founder’ and works ‘on’ the business more than ‘in’ the business.”

Ellison noted that from the beginning, specific roles and responsibilities were carved out for herself, Michelle and Paulo to take on.

“This was done in an effort to help ourselves and staff understand who was responsible for what areas of the company and what decisions,” she said. “There’s overlap and it’s evolving but this was something we felt was a priority. We also met weekly and regularly with my dad (and still do) in order to gain as much as we could from his experience and perspective.”

The team also created a set of values and an updated mission and vision statement, which was based on input from staff, some of which have been with the company for decades.

Ellison’s parting advice?

“It’s not always easy to start the conversation, but succession planning is important to talk about,” Ellison emphasized. “Talking this through with a third-party advisor is a good idea, and of course, having a legal team assisting you is important.”

This article originally appeared in the Jul/Aug ’24 issue of Groups Today.