• Sat. May 25th, 2024

How to Sustain a Family Business Over Multiple Generations

Bynewsmagzines

May 5, 2023
How to Sustain a Family Business Over Multiple Generations

[ad_1]

Opinions expressed by Entrepreneur contributors are their own.

Preparing the next generation for leadership is one of the hardest parts of running a family business. Whether the company has been run for several generations or just one until now, knowing when to hand over the reins to the next leader is a challenge. Identifying the proper person for the task, and strengthening them for it, is something many family business owners grapple with during their careers.

Of course, not every family-owned business has a successor to take on the leadership responsibilities of the organization. Some company founders may not have children or other relatives they can rely on to run the business, and in other cases, relatives have no interest in taking the helm of the company. Senior leaders with their leadership transition mapped out are at an advantage, but they often worry about their relative’s ability to handle the upcoming challenges they know will arise.

That said, preparing the future generation for what’s to come is vital.

Related: Your Family Business Won’t Survive If You Don’t Plan for the Leadership Transition

People learn through experience, not lectures

Think back to when you were a young adult, navigating the world outside your parent’s proverbial nest. You probably encountered several unexpected scenarios that have probably left an impression on you to this very day.

Perhaps you bought your first car without any assistance and wound up with an expensive monthly payment at a high-interest rate because you didn’t understand the importance of building up your credit. Maybe you fumbled an early relationship or went overseas for the first time. Typically, these experiences make for memories that stay with us for decades, and all of them can act as learning experiences that we look to when we encounter scenarios that require us to act.

While you may remember the countless talks your parents gave you, they likely didn’t resonate as a genuine experience might have. They certainly outlined the potential consequences of our actions, but unless you actively went against the advice, you likely never experienced the repercussions.

As such, It can be tempting to swoop down and stop your child from making a decision you know will adversely impact them, but allowing them to experience the consequences makes them better future decision-makers, which will be positive for the family business.

Related: A 400-Year-Old Family Business Remains the ‘Gold Standard’ in Its Category — Its First Women Leaders Reveal the Secret

Give the next generation room to grow

Lecturing the future generation on what it takes to run the business isn’t going to provide the outcome you’re looking for. Instead, up-and-coming leaders need to have their own experiences away from the company (and the eyes of their parents) to realize their capabilities fully.

If “saving the day” is a sticking point for you, perhaps it’s time to let your children experience life outside of your constant observation. If they’re planning for college, for instance, promote universities that are out of state or overseas.

It’s essential to allow the next generation to identify potential solutions to problems and try them out. Even if you know the solution won’t work, they’ll enjoy the excitement of bringing a new idea to the table and implementing it. They’ll have the space to grow into themselves and be better prepared to deal with adversity as a result.

Allow your successors to develop their own identity

A child or relative who grows up in the shadow of the family business needs time away to build their identity. The family name may be quite familiar in their local community. People will likely associate them with their parent’s name and the company, and sometimes, being the child of a family business owner makes it easier to find acceptance in prep schools and college.

Pushing them to create their own identity by working toward a degree of their choice and joining clubs or activities that interest them is crucial. Don’t push your agenda; allow them to pursue their own identity.

In addition, rather than hiring your relative to the family business fresh out of college, require them to work for another organization for a few years. Experience away from the family business will open their eyes to new ways of handling work-related issues that may benefit the family company in the future.

Related: How to Successfully Prepare Your Family Business for the Next Generation

Push character development activities

People who always have someone there to “bail them out” are never given the opportunity to learn their capabilities. Whether you’re the founder of your family business or a second-generational leader, you’ve likely failed in some of your endeavors, and you likely remember your failures and what it took to overcome them quite vividly.

Facing complex challenges and pushing through them is part of developing a solid sense of character. Rather than allowing them to give up and let someone else take on the task, future leaders must work through their hardships.

Give your future leaders a chance to fail. As harsh as that may sound, they’ll learn that hard work and thoughtfulness are critical to overcoming obstacles and gaining the confidence they need to deal with future setbacks.

Don’t hand everything over on a silver platter

You’ve probably worked extremely hard to get where you are today, and you’ve just as likely seen significant successes, losses, and a bit of everything in between. You’ll want to ensure that your future leaders understand what you went through, even if they weren’t there to witness it in your company’s early days.

Rather than handing your child the keys to your business outright, make them work for them. If you’re nearing retirement age and they’re unprepared to run the business, find another family member or a trusted external advisor to handle it for a while. They can mentor the next generation and move them along the succession path according to an appropriate timeline.

It can be tempting to assume the next generation is ready to take over your company and allow you to enjoy your twilight years, but you must ensure they have time to develop skills and realize their identity. The best things in life come from hard work and determination, so give the future generational leaders of your company the space to build their character before bestowing the business upon them.

Leave a Reply

Your email address will not be published. Required fields are marked *