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Handing over the business baton

Handing over the business baton

A father was trying to teach his young son about the danger of alcohol abuse. He put one worm in a glass of water and another worm in a glass of whisky. The worm in the water lived, while the one in the whisky curled up and died.

“All right, son,” asked the father, “what does that experiment show you?” The son responded, “Well Dad, it shows that if you drink alcohol, you will never have worms.”

I recently met with an old friend who was preparing to give a presentation about succession planning to a group of his colleagues that were entrepreneurs and was looking for some tips. He is widely recognised as a successful founder of multiple businesses.

“Why were you asked to give this talk?” I asked him.

He paused for a minute. “I think my colleagues want to know how I introduced my son into the business and kept him there until now.

What should I focus on?” I gave him the example of one of my favourite restaurants in this city that has been in existence for the last 29 years. The owner, a fine chef of south east Asian extraction, started the restaurant in 1995 and has cooked for very famous and ordinary patrons over the decades.

About six years ago, he introduced his son into the business as he recognised it was time he started thinking about handing over the baton.

The son introduced two strategies that completely jarred the father at first but made a bottom line impact immediately.

The chef is a very staunch Christian and despite the wildly successful business he ran, with tables fully booked most Fridays and Saturdays, would not open the restaurant on Sundays as this was a church going day. The first strategy his son introduced was to open the restaurant on Sundays.

From the son’s perspective, they were leaving money on the table and also frustrating their customers who loved their food and were missing out on bringing their families for Sunday lunch, a critical revenue time block in the restaurant business.

The son stepped in to manage the restaurant while the father went to church.

The second strategy introduced by the son were new menu items that were culinary twists on traditional Asian fare and had become hits in many international markets. This one disturbed the father who was a purist and traditionalist. The new menu items were, quite obviously, an instant hit.

I visited the restaurant a few weeks ago and was pleasantly surprised to be welcomed at the door by the son, with the father cooking in the kitchen at the back, doing what he loved.

From the little boy that used to playfully weave around and under the tables when I first went in 1999, to the knowledgeable, self-assured restauranteur who welcomed me at the door I was privilege to watch a baton handing over ceremony happening in real time.

My friend listened to my story and smiled ruefully in empathy with the chef mzee. “It’s so hard to trust these young ones with what you have grown over decades,” he reminisced.

“But as you gave that story, I have actually realised what my talk will be based on: business transformation as a benefit of succession planning.”

He then went on to tell me how he owned a commodities business and had handed it over to his son to manage. The son took one look at the business model and felt it was not sustainable. Taking one of the commodities, the son opened a retail outlet, packaging the commodity into a high-end consumable that could also be sold online locally and internationally.

The business moved from a high volume, low value commodity sales model to a high value, low volume model using the retail outlet as well as multiple social media platforms to sell the now beautifully packaged product.

As he beamed with pride at how he had drawn a conclusive topic based on his son’s achievements, I gently nudged him to think beyond his son’s successes.

“Your son is managing this business well, but his siblings will also want to come into the business. Or not. He is responsible for driving value for not only you as the original founder, but your spouse, other children, employees, customers, suppliers, bankers and the dreaded tax man. How do you create the oversight entity to ensure that all these stakeholder’s interests are well managed, without constraining your son’s entrepreneurial spirit?”

You have to come back here next week to find out the answer to that baton handover question together with other parental life skill lessons such as what kills worms!

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