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Sweet Delight Bakery is a family-owned business that operates a network of bakeries in British Columbia. Founded over a decade ago by Martha Lever and her three children, the company distributes its own products through several locations.

In 1992, Ms Lever's son Peter approached her with a proposal to open a bakery. Martha Lever was in transition at the time. The previous year she had sold another company for a healthy profit. She was thrilled at the prospect of starting another business and told her son that instead of opening a single bakery, it would be preferable to launch a network of bakeries. She wanted her three children, who had worked in her former company, to be involved in the new project both as financial partners and managers.

The company's mission: get back to basics and offer fresh, authentic, healthy and top quality bakery, pastry and charcuterie products, stemming from natural additive-free ingredients. Peter, who had attended The Culinary Institute, is responsible for the baked goods and pastry department. Daniel, who had previously launched a delicatessen plant with his brother-in-law, agrees to supply all the stores of the family firm. Christina, who majored in marketing, oversees all aspects related to her expertise. Martha Lever is the president, coordinating the efforts of the management team.

As far as ownership is concerned, the family members agreed that Martha Lever, her daughter Christina and her son Peter will each own 30% of Sweet Delight Holding (SDH), the family holding company. SDH will also have a 45% interest in the delicatessen plant. Daniel is only a 10% owner of SDH but holds 40% of the shares of the plant. Due to cross participation, the overall ownership is more or less equally distributed. The children invested a small amount of their personal savings to acquire their shares of the family holding.

The company is thriving. New stores are quickly added. The concept of a local bakery that offers 'high end' products is immensely popular among British Columbia consumers.

The business expansion plan is original. Some stores are owned exclusively by SDH; the new stores are owned equally (50/50) by SDH and a partner who also acts as the operator. SDH has no veto rights. All decisions are made by consensus.

Managing relations with partners is a delicate task. Daniel brings together all the partners once a month and ensures that they understand that the "rules come from the top". He excels at this task. Peter is in charge of installing and opening production facilities and less interested in management. The opening of new branches, compliance with guidelines, display materials, packaging and points of sale are Christina's responsibility.

Sweet Delight Holding is directed by a board that is more of a family council: the members are Martha Lever and her three children. For Martha Lever, the key question is "Who will take my place and become the president and general manager of the company?" Even if Peter, Daniel and Christina all do their jobs excellently, none of them have their mother's entrepreneurial spirit.

"Being an entrepreneur is not the same as being a manager! Anyone can manage! Development of the company is still driven by me. The company builder is still me."

If it was not for family responsibilities, the best entrepreneur, in Martha Lever's opinion, is Christina. At 39, she wants to develop. Peter, on the other hand is very timid. Daniel is 40 years old and the one that applies the brakes. He plays the role of the devil's advocate, a role his mother sees as necessary to any business. Although Peter has little interest in management, he would not want either his siblings to be his boss.

Although Martha Lever admits that she does not really plan to retire in the foreseeable future, she would like to quietly step back from the company. She aims to expand the company's operations in foreign markets. After that, she said, the children can soar with their own wings.

Commentary 1
It is only normal for Martha Lever to be concerned about her succession since Sweet Delight Holding is a very successful corporation.
It is only normal that she thinks her successor must be a passionate entrepreneur. Family business owners tend to choose a successor that resembles them. Martha was, and is, a successful entrepreneur so she thinks her successor must necessarily be an entrepreneur. However, the pitfall of the process of succession lies right there – the successor must focus on the future and not necessarily just the here-and-now.

The right exercise is to determine which future business ­scenario is awaiting Sweet Delight Holding. The profile of the successor must be drawn based on this future scenario. In Succeeding Generations, Ivan Lansberg has established that a family business may be facing seven future strategic scenarios: start up, turnaround, extract profit and rationalise existing business, dynamic growth in existing business, redeployment of efforts in existing business, liquidation and divestiture and new acquisitions. Each of these seven scenarios requires different leadership qualities.

If it is Sweet Delight Holding's strategy to aim for further growth, Martha's successor needs the following skills: strategic and financial planning, a clear plan for the future, organisational and teambuilding skills, crisis management, lots of energy, attention for the balance between growth and stability, and staffing skills.

It will not be easy for the Lever family to complete this exercise in an objective way and to choose between the heirs. Therefore, it may be important that the Board of Directors of Sweet Delight Holding recruit a couple of external directors, who can help in making the process for selecting Martha's successor(s) more objective.

Jozef Lievens  is an attorney with Eubelius Lawyers (Brussels/Kortrijk) and the managing director of the Belgian Family Business Institute.

Commentary 2
The two key issues facing this business are: who can lead it into the next phase of development, and how do they drive profits?

There is a significant need for outside directors or advisors on a board that meets regularly with a forward thinking agenda. Outside directors are unbiased, usually less emotional about the business, and have a genuine interest otherwise they would not have accepted an invitation to join the board. Outside directors, carefully selected to address the needs of the business, can be extremely valuable in helping to select a successor and put together a strong management team. Unbiased board members can assist in measuring and evaluating the skill set of each of the siblings. They can often succeed in getting the siblings to open up with their thoughts and wishes more easily than a parent. While the entrepreneurial spirit will live in this company through the legacy of the current leader, it may not be the best type of leadership for the next decade.

Also, there is a need to focus on the bottom line. The skills of the second generation do not appear to include financial management. As these families grow, have children and the business continues to thrive, they will need to provide a good living for all members. Therefore there will have to be a focus on profits. Entrepreneurs are usually interested only in having sufficient funds to 'chase the next dream'. Stewards of family businesses want to assure that the structure and planning is in place to support future generations.

The share ownership is somewhat complicated, and currently the rules come from the top. If this business is to be successful beyond the current leader, leadership must be practised by the next generation and ideally under the non-conflicted guidance of the current leader.

Joan Berta  is a professional consultant, facilitator, moderator, coach and speaker. Joan is the former National Executive Director of the Canadian Association of Family Enterprise.

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