Perhaps no other challenge has so much potential to exacerbate stress rather than family business transition. As if business, legal, emotional, and technical issues are not thorny enough, only 30 per cent of family businesses service to the second generation. That is why a well-thought-out preparation for transitioning is critical.
Here are a few things to consider as you prepare to transition:
Educate the next generation
Create a comprehensive education plan on how you will help the next-generation family members become competent regarding business matters. Schedule regular meetings with the members of the family to review the origin of the business, achievements over the years, financial reports, and other aspects of the business. Making the next-generation members feel some sense of ownership regarding the origin of the business will help them hold on in those turbulent times in business.
Clearly define each family member’s role
Depending on the family members’ strengths, skills, and abilities, define who will play which role. This is where you tell each other the difficult truths. While it may feel difficult telling your children that you don’t think they’ll be able to fill a certain role, for the sake of the business, you need to do it.
Assign roles based on competence and not favouritism. To handle any arising conflicts, it will help to work with a family lawyer in Townsville who have experience in family business transitions, succession planning, and navigating family dynamics.
Remember that transitions do not happen automatically
One common reason why businesses do not see the light of the second generation is the lack of early planning. Most people wait until it is too late. As a result, they make hasty decisions. Transition preparation should begin as early as ten years before the actual hand-over date.
Early preparations leave space for changes such as change of roles and other unavoidable irregularities. The younger generation also gets to have ample time to learn more about the ins and outs of running a business. When the time comes, they will confidently run the business.
While it is inevitable that transition preparation may bring complications along the way, longevity and sustainability of a family business depend on careful transitioning. When transitioned properly, family businesses deliver long-lasting value to the family.