Succession Planning - Part 1
Introduction:
Meeting the Challenges of Succession in the Family Firm
Start
Looking at Succession Issues--Today!
Succession from
one generation to another, or to qualified outside management, does not happen
easily in the family-owned business (FOB). In this blog post ( Succession
Planning - Part 1 ), we start a discussion on why succession planning is so hard
and why it is so important.
If you are
interested in the succession and continuity of your business, you must
understand that planning for that continuity is the critical factor.
The failure to
adequately address the topic of succession is the primary reason that only 30%
of FOB’s continue into the second generation and that only 10% more continue
into the third.
Succession
exists as an underlying issue in all FOB’s, playing a tremendously important
role in the life of the family, as well as the life of the business. Yet owners
and operators of family businesses rarely address succession, apparently because
of its powerful psychological implications, which can sometimes be
overwhelming.
Admittedly
Succession Is A Complicated Topic
Thinking about
and dealing with succession can be extremely demanding, both emotionally and
intellectually. When you begin to examine the concept of succession, you must
deal with aging, mortality, control, and power, just for starters. In addition,
the business issues that founders must simultaneously deal with include
ownership, management, strategic planning, and replacing the professional
relationships from one generation with the next
generation.
These
relationships include key non-family managers and advisors, clients, customers,
suppliers, lawyers, accountants and bankers.
Succession
Forces Business Owners to Make Hard Choices
When more than
one member of the next generation is active in the management of the family
firm, the senior members may feel they're being forced to choose one child, for
instance, over another. Most parents spend their lives trying to convince their
kids that they are all loved equally, but in this situation, the founder and his
or her spouse must make a decision that directly contradicts this message.
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The
Rolling Ten Letter
"Breakthroughs come from an instinctive
judgment of what customers might want if they knew to think about it." --Andrew
Grove, Intel
Many people consider
marketing to be promotion, advertising and all the selling techniques used to
get someone to buy a product. However marketing is much more.
It’s important to
understand that marketing is not the same thing as advertising, selling or
promoting. Those are separate tasks. Advertising, selling and promoting are
essentially the implementation of your marketing plan. That is, once you have
identified your customer prospects and determined how best to reach and serve
them, you then have to go out and make it happen.
A marketing approach to business begins with
the customer’s needs and involves designing the entire business around
fulfilling those needs through benefits.
One great need
of small business managers is to understand and develop marketing programs for
their products and services. Long term small business success depends on the
ability to maintain a strong body of satisfied customers while continually
increasing this body with new customers. Modern marketing programs build around
the marketing concept, which directs managers to focus their efforts on
identifying, satisfying, and following up the customer's needs - all at a
profit.
The
Rolling 10 as a Marketing PROGRAM
What is the
Rolling 10?
It is a
systematic approach to contacting a specific number of prospects, during
predetermined timeframes and to follow-up effectively.
The Rolling 10
is based on the fact that every prospect needs to be contacted at least 4-8
times to establish your name recognition and to possibly make a
sale.
There are two
ways to construct a rolling 10 program.
Option 1
–Letters/Marketing Pieces with Phone Follow-up
Step 1 –
Identify best prospects for your product or service.
Step 2 – Compile
or buy a list that includes complete company data including the decision makers
name.
Step 3 – Write
3-4 letters or marketing pieces that stress the key BENEFITS that a prospect can
expect to receive from doing business with you.
Step 4 –
Determine time frames:
That you can
comfortably support for sending out 10 letters to prospects. A week is a
timeframe that is most used.
That you can
comfortably make phone follow-up. A week between letters and follow-up is a
time frame that is most used.
That you will use
to send each consecutive letter. 4-6 weeks is a time frame commonly
used.
Step 5 – Begin
sending letters at the rate of 10 per week.
Step 6 – One
week after sending first letters begin making phone calls to follow-up on these
letters.
The process then
becomes automatic. Send ten letters and follow-up by phone on
the letters that were sent the prior week. You will have ten NEW phone calls to make
every week to NEW prospects and follow-up phone calls to prospects who might
roll-over for some reason from week to another.
Step 7 –
Send additional 2nd,
3rd, and
4th letters or
marketing pieces and repeat the follow-up process.
If you have
contacted a prospect 4-8 times (a combination of letters and phone) and they
have not responded or become a customer drop them from you
list.
What is it
you're selling?One of
the struggles that entrepreneurs and many others seem to have is the answer to
the simple question, "What is it you're selling?"
In a
major marketing text, McGraw-Hill Publications starts a chapter out with these
telling words:
I don't
know who you are.I don't
know your company.I don't
know your company's product.I don't
know what your company stands for.I don't
know your company's customers.I don't
know your company's record.I don't
know your company's reputation.Now--what was it you wanted to sell
me?
The
reality is that you are selling yourself first, followed by your service or
product, followed by your company or organization.
As far
as selling yourself, the cornerstone is that people must like you to purchase
from you. It is very unlikely that, given the choice between buying from someone
they like and someone they don't, a buyer will select the person they don't
like. The keyis to
get the buyer to like you, and that is done by finding out about them, as
quickly as you can. Your buyers are just like you--complex, interesting,
hardworking, personable and friendly. They are worth getting to know!
Harvey
MacKay's book "Swim With The Sharks Without Being Eaten Alive" provides some
great examples of how an individual can overcome many perceived obstacles and
learn a great deal about a potential or current customer. This book is an
excellentinvestment
that you should make at any stage of your life.
The
second area to tackle is to define the product that you are selling. It might be
you, as a job seeker, a person wanting a promotion within an organization, a
consultant selling services, or someone marketing a service or a product. Ask
yourself thisquestion
when defining your offering: What problem do I solve by providing this good or
service? You may have to fine-tune your offering as you discover the various
kinds of problems buyers are seeking to solve.
Focus on
benefits when you sell. What benefit will you bring to the buyer when he or she
has purchased your service, hired you, promoted you, or is using your product?
In the competitive marketplace that we all operate in, you can no longer afford
tosay,
"Here I am, here is my offering, take it or leave it."
A third
method in this process of defining your offering is to take a somewhat more
radical approach. Tony Robbins, the great motivator, understands that "we will
do far more to avoid pain than we will to gain pleasure." Give some thought to
how youroffering
will help the decision-maker to avoid pain. Do some simple research to determine
what kind of pain your potential buyers have, and then work to clarify what you
offer to remove the pain both now and in the future.
A third
area to focus is on your personal reputation. This comes from having good work
habits, dressing the part, returning telephone calls, being on time (if not
early) and prepared for all meetings, being professional with all that you
encounter, and bygoing
the extra mile for your customers, internal or external.
Each of us
recognizes the reputation that large, well-known firms have. Take an
organization that you respect and write down the specific things that you enjoy
about that reputation. Ask yourself if there isn't something that you can do to
make your own firm a little more like the firm you admire. Is there a policy
that they have that might be adopted by your company? Is the quality they have
superior, and if so, what can you do to upgrade or change the quality that your
organization provides?
It has
been argued that one individual cannot change the reputation of a company. That
argument is countered by the fact that when you are communicating with a
customer, you are the company, and by acting as if that customer could solely
decide your professional fate, you can change or maintain a reputation that an
organization has based on how you deal with that customer.
Increasing sales
has been determined in a national poll to be the number one concern of business
managers and business owners all across America. Knocking on doors or making
telephone calls may get you an appointment, but as you can see, there is a
lotmore to answering "What is it you're
selling?" How ready are you to answer the eight statements made at the beginning
of this article?
What you
can do for Market Research?
Marketing
research is limited only by your imagination. Much of it you can do with very
little cost except your time and mental effort. Don't forget that many
governments - local, state, and federal - have on line data bases like the
census that can be targeted for your specific industry and location. Here are a
few examples of techniques small business owner-managers have used to gather
information about their customers. What you can do for Market Research - with
the interenet and help from local Colleges just about anything you want/need
when it comes to marketing research.
License plate
analysis
In many states
license plates give you information about where a car's owner lives. You can
generally get information from state agencies on how to extract this information
from license numbers. By taking down the numbers of cars parked in your location
you can estimate your trading area. Knowing where your customers live can help
you aim your advertising for good effect. Or, how about tracing your
competitors' customers using the same approach to win them for your
business.
Telephone number
analysis
Like license
numbers, telephone numbers can tell you the areas in which people live. You can
get customers' telephone numbers on sales slips, from checks and credit slips,
and the like. As noted before, knowing where your customers live can give you an
excellent idea of the way they live and what they are
like.
Coded coupons
and "tell them Joe sent you" broadcast ads
You can check
the relative effectiveness of your advertising media by coding coupons and by
including phrases customers must use to get a discount on some sale item in your
broadcast ads. This technique may also reveal what areas your customers are
drawn from. Where they read or heard about the discount offered in your ads will
also give you information about their tastes.
People
watching
You can learn a
great deal about your customers just by looking at them. How they dressed? How
old do they appear to be? Are they married? Do they have children with them?
This technique is obvious and most owner-managers get their feel for their
clientele just this way. But how about running a tally sheet for a week keeping
track of what you're able to tell about your customers from simple outward
clues? It might just confirm what you've thought obvious all the time, but it
might also be instructive.
Customer
Survey
If you are a
business owner, these questions are for you. Have you conducted your own private
interview of customers? Have you personally talked to at least 50 to 60
customers to find out what they like or dislike about your business, products
and service?
A personalized
business survey is a simple thing to prepare and implement. If you do it
regularly, you can find when and where things are breaking down in your
service.
Use a piece of
8.5 x 11 inch paper with the following types of yes and no
questions:
1. Is the service
we provide meeting your highest expectations? If not, what areas can we
improve?
yes _____
no
_____
1.
________________________
2.
________________________
3.
________________________
2. Are we
providing the brands and lines you want and expect? If not, please list what is
needed.
yes _____
no
_____
1.
________________________
2.
________________________
3.
________________________
3. Is our
business clean and pleasant to be in at all times? How can we improve
it?
yes _____
no
_____
1.
________________________
2.
________________________
3.
________________________
4. Do you feel the
business is truly a part of the community? yes _____ no
_____
5. Is it a
friendly place? yes _____ no _____
6. Are the prices
competitive? yes _____ no _____
7. Do you feel you
are getting good values? yes _____ no _____
You may want to
include more specific questions, but the key is to keep the survey short and to
the point. Keep it personal by preparing and signing it yourself. Leave room for
written comments.
Questionnaires
should not be stacked at the cash register for casual distribution. Personally
present them to customers along with a self-addressed, stamped
envelope.
What can you
learn from this? Plenty. What can customers learn? Well, it shows you care and
that is always a sales plus.
Do, Don't
Overdo
The key to
effective marketing research is neither technique nor data - it's useful
information. That information must be timely; your customers' likes and dislikes
are shifting constantly. You'll never know everything about a particular problem
anyway. It's much better to get there on time with a little, than too late with
a lot. If you spend too much time gathering too much data going for a sure
thing, you may find your marketing research is nothing but
garbage.
