According to the Harvard Business School, at least half of the companies listed on the stock exchange in the US, are family-owned. This means that a huge contingent of our country’s commercial infrastructure is made up of businesses formed over generations.
That’s an important number in our economy. But what are the intricacies, politics and dynamics that go into successfully transitioning businesses from older generations to younger?
Well, it certainly can get complicated – as you’d expect when the complex emotional workings of family and its traditions, become enmeshed with the calculating world of business.
But for most entrepreneurs, living the dream means building a business that will be passed on to the up-and-coming generations, so that legacies are built, and family-run empires take root.
So, there are ways to better manage the family business dynamic, so that when the time comes to hand over the reins, the transition is seamless because everyone is prepared.
Here are 4 ways to minimize that transition time, and uncomplicate matters:
Plan for the Future
Firstly, a vision for the business must be talked about and agreed upon by exiting generations and the possible heirs. This vision will entail where everyone would want to see the business in the future, building from where it is at present. Have a strategic vision for that scope, revise it every five years, and then stick to it.
Keep Current Employees Happy and Productive
There will always be a time of turmoil in a business that is transitioning. The lines of communication between retiring owners, new owners and staff, must be open at all times. This can be done by striving to keep the inner workings and day-to-day of the business as close to normality as possible.
Family transitions can be a sensitive matter within your staff– reassurance of the new owner’s skills and intent must be communicated to them with candor, to help make the move seamless.
Establish a Management Structure
One of the most important aspects of family transitions is ensuring a competent managerial structure is in place. This means that the new generation must have the relevant training and competence to hit the ground running, so to speak. The new generation will also have different talents so they will need others to pick up some of the responsibilities of the retiring owners.
Ensure the New Leader is Ready to Take Over
Whoever the chosen one may be, that new leader must be ready to assume these duties, usually over a period of years. This readiness encompasses an already established rapport with staff, experience under the wing of the leaving owner, and a deep understanding of the processes that have helped the business function. Then, once the new leader is comfortable, and seen to be competent, he or she can start to shift to their personal managerial styles. Because, after all, the idea behind bringing in the new generation, is to help the business evolve accordingly with the times – it’s the only way to retain relevance and ensure continued growth and success into the future.
At Destined, we’ve been there and done that when it comes to family business transition planning. Let us guide you in your business’s evolution. And let us help you realize your vision of a business legacy that stays in the family.
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