Family business succession is often an emotional and celebratory event for those involved. Family businesses take great pride in working together and keeping the company in their family line. However, passing down the management and ownership of the business to another family member can be challenging.
It can change the power dynamics within both a family and a business. Management and ownership don’t necessarily come in hand in hand either. Sometimes one family member can continue to own a business while passing down the management role to someone else.
Family business succession is complex, and there are a lot of moving parts at play. Here are a few ways you can make your family business succession as smooth as possible.
A family business succession can lead to a huge change in power, responsibility and lifestyle for all individuals involved. People need time to accept the shift in dynamics and become acquainted with it. Plan ahead and start the succession conversation as early as possible. Some family businesses recommend as much as ten years to plan for succession. You need time to teach your child about the company and mentor them in leadership. The larger the family business, the more time your successor will need to learn the ropes.
Work With An Advisor
Sometimes a few children can be interested in taking over the family business. In these situations, it’s best to outsource and seek the help of a family business advisor. They can discuss the pros and cons of bringing in an outside person to run the company or handing the management to multiple children. You need to handle the decision sensitively and ensure it is the best plan of action for everyone involved.
Research Other Family Businesses
If you’re unsure how to handle a family business succession, look at how other family businesses have done it. Paul Ward, director of Shelbourne Motors, said:
“We have come a long way since we launched our first car dealership in January 1973, which today, is the longest established official Toyota franchise in Northern Ireland.”
Once you have decided on who will take your place, you need to share it with your employees. Non-family member employees need time to get familiar with this transition too. They will trust and cooperate more with the new successor if they have been given time to adjust.
Think outside the box and decide how you want to pass down the family business.
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