How you can ensure your family business survives for future generations?
Each year, family-owned businesses account for roughly 70% of all privately held companies in the world. In fact, only very recently has the number of large family-owned companies begun to decline.
Families typically own many different kinds of businesses, ranging from small "mom and pop" or founder/operator style businesses, to huge international corporations still controlled by one family.
A key factor in any business is its leadership, if succession planning isn't taken seriously - especially in a family business, it can have disastrous consequences for the company - and the family...
Succession planning is a process that begins long before the current generation steps away from the business – the sooner you start planning, the smoother it will be.
Stephen has spent his entire adult life (and most of his childhood) working in his two family businesses so knows the ups and downs of successfully transitioning between the generations.
What is a Family Business?
Firstly, we have to remember that no two families are alike in terms of their members' skills, personalities, and experiences. Just because your parents or grandparents successfully built one business does not guarantee that you'll succeed with another. You don't necessarily need to think about this before taking ownership of the family business—but it is something to consider.
Second, remember that most people prefer working for themselves rather than someone else. Once you've succeeded in building a family business, you probably believe that your children will run it just as successfully after you step down or retire—and they might! But if they've never worked elsewhere in their lives (which is often the case), there's no way to know how committed they really are until faced with the decision either to buy into (literally) or walk away from the family business.
Selecting the next generation of leaders in any company is filled with pit falls and potential disaster, but when you have family relations and inter-generational differences, the kitchen table / boardroom table can become a battlefield...
What challenges might a Family Business face?
Family businesses face a number of challenges that other companies usually don't, including interpersonal relationships and closely held values.
Some common challenges are:
Only one person in the family wants to take on the responsibility of running the business; other relatives dismiss it as "not their thing" or believe they will be able to walk away if necessary...
Conversely, more than one family member wants to take over but how do you choose which is the right person to lead the company into the future and ensure it's success?
The current generation is hesitant to change a formula that has worked for them for so long and expect the next generation to be able to keep doing what has already been established
The current generation is not sure the next generation have any interest in the family business or have any desire to see it continue to grow into the future
Family members are unsure what each other's strengths and weaknesses are or if they have a full understanding of what's involved in the business and what it takes to be successful