Succession Planning for Family Business
– By Dr. Sunil Shukla, Professor
It is believed that few family businesses survive to the third and fewer to the fourth generation. Percentage of family firms that successfully transition across generations decreases from generation to generation. Some sell to the outsiders, some sell to the employees while the remaining fail. One doesn’t have to reinvent the wheel to know the causes for such unsuccessful transitions. The major contributors to the failure are known commonly: no succession plan, feuding among family members and probably no estate or family legacy plan. Though on the face these appear to be common, but are difficult to deal with. Of all these, succession planning is the most critical task to securing the future of family firms. The failure to plan and manage succession well is the greatest threat to the survival of family business. It is also a chance to preserve a lasting institution that reflects family’s ideals and goals even after the current leader. Further, it is an important part that cannot be reached without the succession planning process. One has to understand that succession is a life long process of planning and management. If not planned and managed well in advance, this alone is sufficient to bring life cycle of a business to an end. There might be situations when the current leader may have to be suddenly withdrawn from business due to long illness, accident, unexpected death or incapability. Remember a situation when no one is groomed to take over management responsibilities and the second key person does not have sufficient shares in the firm. The business suffers from risk of being wiped out. Hence, the need for succession. The firm needs to find a successor, to remove doubts and apprehensions in the minds of key people besides ensuring continuity and leading towards growth. Even if the business is not passed down to the next generation succession has to be done to ensure that the business survives.
The entrepreneur has to understand and accept that planning for succession is necessity for survival. He/she has to first determine whether succession is to be done within the family or outside. In case of small businesses, probably it would make better sense to have one person with general management skills and few others for special skills. Whatever is the case, advance action in selecting and grooming management successor(s) is necessary. Once successor is identified, the succession plan has to be developed keeping in view the specifics of the firm, implemented and monitored carefully with scope for necessary changes. Also the succession plan has to be coordinated with personal tax planning and distribution of estate, among several pre-requisites for ensuring the continuity of family firms successfully.
Dr. Sunil Shukla is a behavioral scientist, engaged in entrepreneurship teaching, training, research and consulting is Professor and Chairperson (PGPs) at Entrepreneurship Development Institute of India, Ahmedabad, which pioneered the Family Business Succession Programme way back in 1990. The Institute offers full-time two-year ‘Post Graduate Diploma in Management-Business Entrepreneurship (PGDM-BE), with specialization in ‘Family Business Management’.
PGDM-BE has been adjudged ‘Outstanding Entrepreneurship Program Abroad’ for the year 2014 by prestigious United States Association for Small Business and Entrepreneurship (www.usasbe.org), the largest independent, professional, academic organization in the world dedicated to the discipline of entrepreneurship..
Dr. Shukla can be reached at firstname.lastname@example.org
EDI Empresario: Gavisti
Gavisti is a business competition, where teams are in combat to innovate, to compete in technical, technological, financial feasibility and to attract investment and customers.
The participating teams would get a feel of live market condition and decide on strategy of how market behaves, it would be more like live dynamic market condition, where maximum 10 teams would be competing with each other in market economy of not more than 10 crore where teams would raise funds and sell their products as well.
1. Maximum economy size would not be more than 10 crore, in that teams have to raise funds for their fixed asset.
2. The investors who will invest in your idea would be students, thus it becomes duty of the teams to convince investors to invest in your firm.
3. For purchasing of product also there would be different set of participants who would judge your product by customer point of view and would judge on your team’s vision and marketing skill.
4. Teams need to work out finance very well, that is they need to work on their fixed cost and working capital, teams would only be allowed to raise their fix cost from the market, and the working capital required for production would be done through bank financing.
5. Also there is Price Money for the Investor that would be judged on how wise the investor makes their decision.
6. Teams should see the unit product price need to be range of 500-5000.
Role of investors will also be played by the students:
1. There would be total of 50 participants who would act as investor and customers both.
2. We would divide these participants in two batches of 25 each and at single point of time one batch would act as investors and other would act as customer, after some time we would change the role and vice versa.
3. To make things more interesting the level of money supply would be controlled by us and money would be supplied in parts.
4. There are price money for investor as well and would be defined in predefined equation set by us, for declaring the winner for investor we would consider dividend paid by company, their market capitalization, and total number of shares.
5. For investor to become winner there would be parameters to judge on.
6. It is to be noted that in 50 investors there would be group of 25 who at a point of time would act as investors and other buyers.
7. After each round the groups would exchange their roles. Thus everyone would get opportunity to buy products and be a part of investment.
8. Participants who would like to participate as investors can also take part, prior registration would be required.
You can be a part of it too! Last date to register: For Team – 17th February, 2014 | For Investors : 28th February, 2014
Find more details here: http://bit.ly/1ou1ajm | Register here: http://bit.ly/1eqdfxo[Top]
EDI – Empresario (7th – 8th March, 2014)
Empresario is an entrepreneurial event at EDI, connecting entrepreneurs with Venture Capitalists, Angel Investors, Bankers, Industry Professional and common people.
As known ” the world is a stage & we the players” thereby this platform is to propel those who know they can & who know they will achieve, to sense what is not sensed & to create what is not created, so this Empresario fragrance will not fade till one slogans ” I have promises to keep & miles to go before I sleep”
Who is it for?
-Students from the technical & non – technical background
-Venture Capitalists, Investors, Bankers
- In Innovator to Entrepreneur (I2E), we will be identifying and inviting several innovators who hold or have applied patents for products/ processes that have the potential to be commercially viable. A platform to showcase their product/ idea to the team of experts, Venture Capitalists and Financiers. (Register here : http://bit.ly/1eTgQZt)
- The participants will also get an opportunity to get Counseling from experts from various fields like Financing, Taxation, Etc.
- Participants who are eligible and interested to get financial support for their ventures will get support to make business plans and an opportunity to pitch their product/idea before a group of Venture Capitalists and Financiers. (Register here : http://bit.ly/1j1whPm | Last date : 15th February 2014)
- The proposed business ideas will have stalls put up in the format of a Start-up Fair that will be more convenient for participants to network and find the right business partners, mentors, industry association leaders and investors/financiers. (Register here: http://bit.ly/1g83TxB )
- EDI-NEN Launchpad Workshop 2014. National Entrepreneurship Network is an organization working towards fostering entrepreneurship amongst students of India. If you are a student innovator with an idea/prototype/proof of concept to share, then EDII-NEN Launchpad 2014 platform is for you. The platform will provide you with first-hand exposure to entrepreneurship through workshops on commercialization.
- Gavisti is a business competition, where teams are in combat to innovate, to compete in technical, technological, financial feasibility and to attract investment and customers. (Register here: http://bit.ly/1eqdfxo | Last date: 17th February 2014)
Entrepreneurship Development Institute of India
(Via Ahmedabad Airport & Indira Bridge),
P.O. Bhat 382 428, Dist. Gandhinagar,
Vibha Natraj, Coordinator
Phone-+91 97220 55999
Aashish Jhamb , Coordinator-Events
Shiva Mehta, Coordinator-Sponsorship
Phone-+91 99999 26399,
For general queries, e-mail us at email@example.com
Like us on Facebook : https://www.facebook.com/Empresario.EDI
Srihari Patel,+91 87580 37085
Ritu Kedia ,+91 87582 98869
EDI receives ‘Outstanding Entrepreneurship Program Abroad 2014’ Award
Entrepreneurship Development Institute of India’s (EDI) course on Business Entrepreneurship has bagged the United States Association for Small Business and Entrepreneurship’s (USASBE) ‘Outstanding Entrepreneurship Program abroad Award 2014’ in the Entrepreneurship Education Awards category.
Despite a record number of submissions, EDI’s Post Graduate Diploma in Management-Business Entrepreneurship (PGDM-BE) programme was featured among four shortlisted finalists. Dr Sunil Shukla, chairperson, PGPs, EDI presented the varsity’s model in the conference. EDI’s course emerged as the winner, beating Institute of Business Administration, (Karachi, Pakistan), Queens University, (Belfast, UK) and the Center for Entrepreneurship, (Moscow, Russia). The award was given at the Annual Conference of the USASBE in Fort Worth, Texas, between January 9 and 12, sponsored by Texas Christian University and a consortium of universities in the North Texas area.
Reflecting the increased interest in entrepreneurship in today’s economic climate, attendance was at record levels at the annual conference of the USASBE. Sponsored by Texas Christian University and a consortium of universities in the North Texas area, the conference brought together academics and practitioners to discuss a wide range of topics from how to teach people to be entrepreneurs to how to develop and grow businesses, particularly in this tech-dependent economy.
While there was wide diversity on opinion on how to do things, everyone agreed on the importance of the entrepreneurial mindset and skill set in today’s environment both for business and not-for-profit endeavors.
PGDM-Business Entrepreneurship at EDI
Entrepreneurship Development Institute of India was set up in 1983 as a pioneering institute for Entrepreneurship Development and Training in India and around the globe.
The driving values at the Institute are innovation, experimentation, risk-taking, inclusiveness, thinking out of the box and to offer need based & socially relevant solutions.
Are you an individual who wishes to advance his/her ambitions, or is aspiring to start or grow a venture?
Are you someone who wants to take your family business ahead effectively?
Are you the one who is looking for a short term employment before starting your own business?
The PGDM-BE programme is something you should surely opt for.
It is open to all individuals who are either considering embarking on an entrepreneurial career pathway or have taken the first steps of their entrepreneurial journey. Entrepreneurial and Management skills are the two critical tools that will help the participants face any challenge in their career. EDI believes in the saying, ‘Practice makes man perfect.’ Though classroom theory is important for acquiring management knowledge but there is no substitute for practice in order to ingrain the entrepreneurial decision making skills. This course includes case study discussions, simulation games, teamwork, tutorials and role-play exercises, among other activities. The students are given opportunities to interact, challenge points of view and discuss business situations on an academic platform. One of our key strengths is the degree of personalized mentor provided to each participant.
The course is offered through six trimesters over the two years period.
The complete structure of programme includes:
-A 2-week orientation to focus on Entrepreneur Interactions and Learning, Entrepreneurial Career and Aspirations & other Optional Preparatory Courses.
-Throughout the trimester, courses are offered in core areas which have relationship with real business issues through case studies and projects that cover different company stages, sizes, industry and international contexts.
– We have also designed seminar courses to provide in-depth understanding of various sectors where the student want to associate in future.
– The elective stream builds on learning’s from the core courses and helps the student to develop in-depth knowledge or expertise in specific areas. The Course offers dual electives in Entrepreneurship and Functional Areas, mainly, New Enterprise Creation (NEC) & Family Business Management (FBM).
– Besides imparting knowledge on creating and managing business, this course also would enhance the knowledge in functional areas.
– Experiential learning is emphasized through Summer Internship and Projects.
The admission process consists of taking any of these tests—CAT, MAT, XAT, ATMA ,CMAT. Candidates can apply to EDI by acquiring application form available on our website. Online payment options are also available.
There are two sets of tests under this category designed to analyze behavioral predispositions like drive, initiative, general entrepreneurial tendencies, leadership, personality traits, etc. This Entrepreneurial Aptitude Tests measures entrepreneurial potential and commitment.
For more information on PGDM-BE | http://www.ediindia.ac.in/PGDM-BE.asp
Brochure | http://www.ediindia.ac.in/DownloadInfo.asp?ID=BE
Apply online | http://www.ediindia.ac.in/AppBE/[Top]