The family business – the next generation?

Posted: July 14, 2013 in Uncategorized
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The biggest challenge facing any small business today is… succession planning. Many business owners from the baby boom generation would like to be able to retire but, cannot.

They can’t because:

  • They haven’t given any authority to their kids who work in the business
  • They’ve made no (prior) succession plan.
  • They have equity in the business they can’t unlock so they feel they have to stay in the business longer to protect their own interest.

I guess it starts with the kids who work in the business. Ideally they should have 5 (or more) years of experience working for someone else. They would gain valuable experience seeing how other companies work (or fail) and would have been offered no special privileges while there. Hopefully they would gain experience in planning, budgeting, human resource management and possibly marketing.

I have heard a few stories of family members who worked for another company and then returned to the family business. They saw the business in a different light and were in a position to make some changes to streamline the business or improve management thinking.

The second challenge is – the position of the incumbent. The scion of the family has run the business their way for years and years and want no part of any changes. It has worked in the past so, it will work in the future… right?  No it won’t!

The family business that makes room for new (family) employees and has been only eking out a small profit before the new generation arrives can’t be expected to automatically soar to new heights. The only addition is overhead.

More on this in a future post.

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