A sustainable business is a business that not only can be passed on but that can be received into good hands. This is a key factor in long-term success, and it means that the onus is on the family to ensure the right mix of experience and knowledge is available in the next generation. We have found that the most common cause of anxiety around succession is the owner’s often unspoken opinion that there is no one among the next generation who is fully ready to assume responsibility for the business. We know that the only way around this is to prepare the next generation adequately to take the reins.
There are various things a family business can do – and write into its Constitution – to ensure that the next generation is ready and able to take on the business, preserve the family’s wealth and plan for and achieve future success. We advise clients, for example, to encourage all interested family members to work elsewhere before joining the family enterprise. It is a wise policy to promote independent thinking and the attainment of other educational and career experiences. In this way, the next generation develops a broader understanding of business in general, and brings new ideas and practices back to the business.
It is important the next-generation members cultivate different skillsets, so that together they become a coherent team with a broad base of skills. Therefore, allow each person to follow his/her own interests and passions, rather than shoe-horning them into the particulars of the family business. A wider breadth of interests and knowledge is far preferable to simply moving from ‘summer job at the company’ into a fulltime ‘role for life’. Within this context, it is very important that the next generation understands digital business and the opportunities it presents. The future of business will be technology-based, so your business must have the requisite skills to participate in and make the most of the smart economy.
The greatest threat to a smooth and effective transition to the next generation lies among the members of the next generation themselves. We have found that sibling rivalry plays a huge role in undermining the succession process and can destabilise the company. We have worked with many clients where the key problem was the inability of the next-generation siblings to work together coherently and plan out their roles into the future. The only way through this is open, honest and effective communication. It is absolutely essential that at the family forum, each member clearly states his/her career objectives and ambitions, and future expectations with regard to their role in and contribution to the family business. These issues must be brought to the table and talked through, until consensus and cross-generational understanding is reached.
This can be a very difficult conversation for a family to conduct, due to the negative language that is sometimes employed, the ‘baggage’ that gets carried through into the room. This is when a neutral advisor can prove invaluable. We know how to guide the conversation, maintain respectful discourse and steer the discussion towards effective decision-making.
