3 Tips to Achieve Smooth Family Business Succession
Two thirds of all private sector firms in the UK are family businesses. In fact, family businesses make up over half of the UK GDP and 40% of private sector employment. Unfortunately, less than half of those companies continue past the first generation. That’s why Dr. Steffi Hussels, a Senior Lecturer in Entrepreneurship at the Cranfield School of Management, decided to discuss family business success in a recent article.
Dr. Hussels outlined three issues that most family businesses face and how they can overcome these challenges and see their company last into the future.
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Plan for the business and plan for the family
According to Dr. Hussels, succession isn’t just a one-time event; it’s a process. He reminds family businesses that they need to start formulating a succession plan years in advance, long before it’s time to hand over the reigns of the company. Also, the planning process shouldn’t just work on delineating the roles of the next generation, but also the role of the future business. There needs to be a clear vision of the relationship between the family and the business including aspects of non-family management, board membership, conflict resolution, and more.
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Prepare for the next generation
A family business won’t last past the first generation if the next generation isn’t prepared to take over. And Dr. Hussels says that it takes more than just the right education and development; the next generation needs to gain early experience outside of the family businesses. Successful companies prepare the next generation by keeping the senior generation involved in non-executive roles where they can still offer advice.
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Hire from outside the family
Finally, Dr. Hussels recommends looking outside the family to keep the family businesses going into the future. “It is a fortunate but very unusual family that has a gene pool capable of supplying all the ability necessary to take the business into the second, third, fourth generation and beyond,” he said. It’s important to bring in outside advisors and board members to bring clarity and detachment to decision making.
To learn more, discover the Cranfield Business Growth Programme, designed to help ambitious business owners.
About the Author
Kelly Vo
Kelly Vo is a writer who specializes in covering MBA programs, digital marketing, and personal development.
