Neglecting your succession plan is risky business

Amanda Kramer

For many families, that news is hard enough. But for the younger Schiavo, the diagnosis was doubly complicated; his father is a partner (along with Schiavo's mother, Rose Marie and brother Jim) in their thriving businesses, Caf? Continental and Club Majestic.

Even more problematic, the two had barely discussed the future of their family business if something should happen to one of them.

"Immediately, we talked to a lawyer and we needed a will," Schiavo said. "We needed to figure out who owned what. It was very emotional." And so, the Schiavos began a study in "succession planning," a concept that experts say is central to the continuation of a family business.

Succession planning is not a one-time event, said Ann Kinkade, the director of UWMadison's Family Business Center. It is usually a decadeslong process where families pass on not only leadership to other generations, but business values.

"It's beyond just a management change," Kinkade said. "It's transitioning the family leadership, the business culture and the ownership control to someone else." Kinkade said the Family Business Center frequently advises business leaders who are trying to deal with succession planning.

The center facilitates discussion among family members, Kinkade said. They also create seminars and lectures that focus on issues pertinent to succession planning like conflict resolution, communication and strategic planning.

Jeanie Farmer, a partner at Smith and Gesteland, said the firm also works with families who are dealing with business longevity and management issues.

While the Middleton-based public accounting and consulting firm helps businesses plan financially for any major transitions, it also helps families hone their leadership and management skills.

Farmer said the firm created a group called "Sons and Daughters of Bosses." Successors of family businesses get together once a month in Middleton and Sun Prairie to discuss business challenges away from their parents, Farmer said. The group has been around for nearly 10 years.

"We've found with SDOB that sometimes parents aren't the best teachers for their kids," Farmer said. "It's important that these family members look to nonfamily managers to transition the next generation of leaders." Farmer said Smith and Gesteland also helps teach future leaders about financial statements, common personnel problems, marketing their companies and preparing for growth.

Today, Nicholas Schiavo's life has settled down ? despite the booming popularity of his businesses and a very interesting daytime sleep schedule thanks to his late-night club hours. A business plan is in place, and his father has been cancer-free for two years.

Although his family has had to deal with their share of personal and professional problems, Schiavo said being in business with his own family is truly rewarding.

"The upside is everybody really does have the same level of commitment," he said.

madison.com ©2009 Capital Newspapers. All rights reserved.