3 easy steps for small business owners to start succession planning

The first secret to working alongside any loved one is defining roles and responsibilities. When it comes to succession planning, that may be an ongoing conversation, as a suitable heir or heirs take on more authority, grow their skills, or form their own life goals.

Clear communication will help support your succession plan. Ask yourself: What does the next generation bring to the table and what experiences do they need for future leadership? Build a timeline of potential advancement from there.

While it was important for Murphy to let her kids forge their own paths in life, when they eventually wanted to join the family business after graduating college and starting careers, she created positions for them based on the company’s needs, mainly sales and operations. Over time, her two daughters have found ways to step up, such as becoming a buyer and creating a private label, Pioneer Linens Signature Collection. Growing their web presence with social media was also necessary.

“Part of why a business is going to succeed is how creative that next generation is,” she said.

When love and money mix, conflict is often a concern. A third party can step in to help alleviate friction, draft a formal succession plan, or coach a next-generation business owner. Just be intentional about who you’re talking to and why.

Your business banker can help, though they may be limited to working with authorized representatives and your company’s lawyer may only represent the business, the CEO, or certain leaders. Depending on your business, a financial advisor, succession planning consultant, or estate planning professional may be able to holistically address your needs and those of your family and your business.

Murphy has worked with an attorney on a potential succession plan and a business coach to help her family through challenging times.

“There are so many variables right now as to what’s going to happen [with Pioneer Linens] and what [my daughters] want to do,” she said.

Making a succession plan can be tough. It can cause conflict or force tough family or money conversations, but the work can be worth it.

By documenting your wishes for when you step down or pass on, a formal succession plan guides your business through a transition and extends its life. Yet only about a third of family-owned businesses have a “robust, documented, and communicated” succession plan, according to a 2021 PWC survey.

When control of Pioneer Linens was quickly passed to her, Murphy didn’t have much training to lead the business. She was, however, inspired by a goal of celebrating the store’s 100th birthday to keep it running. Now, more than 111 years after it opened, Murphy is weighing paths forward. If she decides to pass the business on, Murphy has raised the fourth generation to be ready.

“I’m certainly confident that if I decided that I wanted to have them [take on the store], that they’d be incredibly successful at doing it,” she said. “They’ve learned a lot. They’re smart. They’re very hard workers and very dedicated. Not only that, but they have that pioneer spirit that is part of their legacy.”