Running a lemonade stand with a float of nickels and dimes and a pitcher of inventory is just as important for a five-year-old as taking French classes or piano lessons, a family business expert argues.
Dr. Pramodita Sharma, who teaches at the John Molson School of Business at Montreal's Concordia University, says it's an important first step in succession planning for an immigrant-entrepreneur family. "Let the children plan the whole event and get the basics imbued in them," says Dr. Sharma, a first-generation immigrant who lived in Asia, Africa and Europe before coming to Canada.
Ten years ago, a Deloitte and Touche study found that an alarming 66 per cent of businesses had no plan for selecting a successor. Dr. Sharma says little has changed in a decade, and that family businesses don't know where to begin. Mix in the fact that second-generation immigrants often pursue post-secondary education and don't take on the family business, and you have a recipe for disaster.
Dr. Sharma has recommendations for families interested in succession planning:
Hire a succession planning consultant
The field of succession-planning consulting popped up about 25 years ago, and it's a movement Dr. Sharma endorses, though she points out few businesses have actually taken advantage of it. "If you were sick, would you think twice about whether you should go to a doctor? Of course not. They make people better, and when it comes to many issues related to family businesses, there are experts who can help," she says, noting it's important for families to get help from someone who isn't emotionally invested in the company.
Family Firm Institute Inc., a think-tank founded in 1986, can help immigrant-run businesses find a succession-planning adviser. Fees are variable. It has 1,500 members worldwide, and 75 per cent of them are family business advisers or consultants. The institute holds an annual conference and publishes the quarterly journal Family Business Review.
For more information on Family Firm, the international body for family business professionals, go to www.ffi.org.
Join a not-for-profit group, find support
Dr. Sharma recommends becoming a member of the Canadian Association of Family Enterprises (CAFE), a not-for-profit group dedicated to supporting family businesses. "When I presented to CAFE's annual symposium about two years ago, there were about 300 attendees. Very rarely did I see a non-white person in the room. No immigrants at all, which was scary because I know there's a major need," Dr. Sharma says.
"Immigrants are not using this incredible resource we have in this country."
Dr. Sharma says a good way to ease into the tough topic of succession planning is to watch a video titled Winning the Succession Game . For the video and other CAFE resources, visit its website at www.cafecanada.ca. The video is available under the "resources" section at a cost of $75 for non-members and $60 for members.
Reach out to your local university
Dr. Sharma says entrepreneurs and family businesses should also contact their nearest university to see if they have a family business centre, which may be able to suggest consultants and support groups. Many university business centres also hold seminars and do outreach work. The Business Families Foundation (famillesenaffaires.com), set up in 1993, says that "the issues faced by families in business are always the same; the way they solve them depends upon culture, tradition, and values."
The foundation has launched International Centres for Business Families at a number of Canadian universities:
• University of British Columbia, Vancouver: Business Families Centre, Sauder School of Business, go to sauder.ubc.ca/bfc/index.cfm.
• University of Alberta, Edmonton: Alberta Family Business Institute (ABFI), go to abfi.ca.
• The University of Western Ontario, London: The Richard Ivey School of Business, Business Families Centre, go to iveyentrepreneur.ca.
• McGill University/HEC Montreal: Centre International des familles en affaires McGill/HEC Montréal (CIFA), go to expertise.hec.ca/famillesenaffaires.
• Dalhousie University, Halifax: Family Business Centre, go to familybusiness.dal.ca.
Introduce succession planning to your children
Whether a family runs a small Chinese grocery or a multimillion-dollar machinery company, Dr. Sharma says it's never too early for a family to start succession planning. Even if the parents' dream is for a child to go to university, children should still understand the family business. Communication is key and leadership skills are invaluable, Dr. Sharma says.
Dr. Sharma says entrepreneurs should encourage their children to read Family Business Magazine or visit its Web site at familybusinessmagazine.com.
And for those children too young to read? Take them to a local hardware store to pick up wood, nails and paint for that lemonade stand.
Special to the Globe and Mail