The Three Key Ingredients to Family Business Transition
“How to transition the family business to the next generation?” The answer depends on (a) who is asking (incumbent or rising generation) and (b) when (in the life-cycle of the business) they are asking. More often than not, the question is raised too late – when the incumbent generation is thinking of retirement, when there are already unstated expectations from both generations, and when there is already latent conflict.
The key ingredients to a successful family business transition are open communication between the generations working in the business and with other family stakeholders (current and future owners), a shared vision both for the future of the business and for the family itself, and a good governance structure.
Those things are the foundation required for succession. They come before identifying the right family member to occupy any particular management position.
Most families don’t set the foundations first, but that doesn’t mean all is lost. A process of vision alignment, improving communication and establishing strong governance can get things on track and reduce the risk of the latent conflict blowing up.
Consider This: Has your family business thought about succession? Have your imagined or visualised what succession looks like (for both the incumbent and rising generation)? Do both generations have a clear understanding of what will happen and when?
- The 10th Commandment Of Family Business Succession: Create Family Unity
- The Key to Making Succession Work in Family Business
- How to successfully move a family business to the next generation
- Family Unity Is Critical For Business Continuity (Part 2 Of 2)
- Bringing the next generation into the family business
- How To Transition A Family Business To The Next Generation
Here is more on reading on wealth transition.
Also published on LI as Family Business Succession.