Family businesses face a myriad of problems, ranging from financial difficulties to business management deficiencies. However, a common cliché among people is that wealth will not survive past three business generations. Thus, this is a fate shared by many family businesses. Once a great founder exited the business scene – the vibrancy, the vitality, and the adrenaline that powered the business through its golden years dissipate, leaving only complacency. This seems to be the natural progression of most family businesses, unless business owners step in to make an intervention and inject vitality into their business through a well-thought out business succession planning and strategy.
Without proper succession, the road for a family business can only be downhill – indicating a very critical role that successions play in ensuring the longevity of a business.
Nowadays, the leading family businesses are in their third generation. The fact also remains that these family businesses follow a very clear succession path, guaranteeing both longevity and vitality.
Here are some reasons why today’s businesses are getting business successions and how you can incorporate these with your own business, ensuring greater success during the transition process:
More informed about the challenges of transition.
Chances are, today’s family business manager has read about numerous family business transition failures. Thus, they are in a good position to implement more effective business transition strategies.
In addition, many traditional family businesses are phasing out old-school business succession approaches, where a business ownership is automatically transferred to an eldest son or someone within the family who may not have a business management experience, but is likely to run a business in the future.
Moreover, it is due to the fact that modern family business managers are more educated than their predecessors, therefore able to institute modern business management practices into the running of a business.
As opposed to past family businesses that run in a more autocratic manner by a business titan, leaving everyone else clueless about critical business processes – a modern family business management is more democratic as its future leaders begin practicing business management early. This inclusive approach in a business management between generations has led to a multi-generational success, contributing to the longevity of a family business.
Practice good governance.
Instituting good governance procedures in family business management is what successful companies do. Have some constitutions and councils in order to foster an inclusive approach within the management of your business. You can also hire a business succession advisor to assist you in implementing good governance procedures for your family business.
Be adaptive to outside support.
The most successful family businesses are more adaptive to outside support, particularly when it comes to the implementation of management functions. This is also the reason why many family members often perform supervisory functions, while relying on outside support and expertise for the management of business functions and systems.