Starting a business is no small endeavor, with financial, organizational and marketing challenges thrown at entrepreneurs from the get-go. Those challenges can be even greater for Hispanic business owners who often face a lack of necessary resources.
The number of U.S. businesses owned by Hispanics increased to 2.3 million between 2002 and 2007, according to the U.S. Census Bureau. A majority of Hispanic business people report that they started their business to be their own boss and gain control of their lives and time, according to “Business Owner Perspectives: 2011 Insights in an Uncertain Economy,” a survey conducted by GfK Custom Research North America for Massachusetts Mutual Life Insurance Company (MassMutual). And 70 percent of these business owners plan to pass their business on to a spouse or a child.
“Latino business owners report to a higher degree than other business owners that providing for their families is the strongest drive for going into business,” says Chris Mendoza, assistant vice president of multicultural market development at MassMutual. “Also, Hispanics’ definition of family is quite broad, meaning they have more people counting on them. As a result, three-quarters of Hispanic business owners actually know that they want to transition their businesses to a family member; they just need to understand the advantages of having a formal succession plan.”
Here are some tips for business owners to smoothly hand over the reins of business to a successor.
1. Develop clear guidelines to becoming a leader of the business.
You may have communicated with your intended successor your intention of passing on the business one day. But by establishing an employment policy with specific guidelines, outlines for family member involvement and how the next leader will be selected, you can give everyone at the table a clear explanation of what is expected.
2. Determine the leadership needs of the business.
Use a strategic business planning process identifying the leadership needs of your business set out five to 10 years ahead. This plan should constantly evolve as the business grows and changes. It also gives you a backdrop of finding a successor who fits the leadership needs of the business and brings an essential objectivity to the grooming and selection of future leaders of the business.
3. Establish a successor development plan.
Use your successor development plan to assess the successor’s current skills and interests, as well as what additional experience, education and professional development must be achieved, with a specified timeframe and resources made available to help the successor achieve them. Pull the additional experience, education and professional development requirements from the future leadership needs of the business to help ensure the person and the business will be a match when you’re ready to hand over the reins.
4. Coordinate a succession plan and successor development with key managers.
Incorporate company managers into the strategic planning and successor development plan. You can have them participate as needed in the process, but make sure they fully understand their position during the transition process, and how it will impact them. It is important to have their support for the future leadership to ensure a seamless transition. You may need to include a conversation about the rigorous process, explaining that successor development and selection, not just nepotism, determines who leads the company.
5. Use a mentoring plan.
Bring in a mentor from outside of the business who can help coach, advise and educate your successor. This mentor should be familiar with your industry but not involved in the company or with a competitor. You can often find professional career coaches, advisory groups and professional groups to help fill this mentorship position.
Taking the time to establish a succession plan, even if you feel overwhelmed by the current day-to-day operations of the business, is essential to helping safeguard both your and your successor’s future when the time for business leadership transition takes place.