Not every family member wants to stay in the family business. Planning your business succession plan is critical to know if it will happen as expected. There can be options to sell the business if your family would instead not take it over.
It is estimated that 70% of family-run businesses do not survive the 2nd generation, and 90% don’t make it to the 3rd generation.
Indeed, not all the owners of these businesses are responsible for the failures. However, professional advisors to family-run businesses and even tax consultants can take some responsibility.
Too often, everyone pays attention to the technical aspects of a business and not the emotional succession.
The people aspect needs to have the time and discussion. It needs to ensure everyone is on the same page regarding expectations.
Moving from a family business to a non-family business
Too often, a family business runs casually. With roles and responsibilities allocated to family members potentially not qualified for, succession plans can fall flat.
With support structures in place for most of the time, as soon as that support leaves the business, the business fails.
Business management is a crucial study for anyone wanting to continue running a business. A new broom can sweep clean, but new thinking needs back up from business and financial knowledge. In addition, people skills, legal expertise on HR matters, and hiring practices need a professional hand.
Communication is key
Family-run businesses can have a hierarchy that can stifle honest conversations. Employing an intermediary to invigilate the inner workings of a succession plan, including having the difficult conversations that may not occur naturally, can help the process.
It is not just about the legal ownership, roles, and responsibilities, but also the chain of command and hierarchy. Removing the sticky conversations from the family members and putting them in the hands of a professional is a better option.
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