In this article:
- Clarify the mission of the family business.
- Allow sufficient time for this type of business takeover.
- Clearly communicate at every step of the takeover
- Define the roles in the family business
- Train successors to optimize the transfer
- Take into account intergenerational differences
- Consult the family business succession checklist
Clarify the mission of the family business
Every business should have a clear mission, its raison d’être. Family businesses are no exceptions to this rule.
Your mission should be:
- Specific enough to guide future decisions.
- Broad enough to keep pace with developments in your business and society
- Measurable (to be able to evaluate progress)
To learn more about a company’s mission, vision and values, read our article: “What are the benefits of defining your company values?”
It’s also important to define the business’ place in the family and what it represents for stakeholders.
It could be:
- Transactional (a source of revenue for the family)
- Emotional (a commitment passed down from one generation to the next)
Allow sufficient time for this type of business takeover
Transferring the family business from one generation to the next is challenging. This process requires a lot of preparation and time.
This transfer can take about 5 to 7 years. It starts with a discussion about a potential takeover and ends with the efficient transfer of the family business.
However, a number of factors can influence the complexity and length of the transfer, such as:
- Successor’s skills and knowledge
- Company size
- The differences in the visions of the successors and transferors
- The successor’s level of involvement in business activities
- The complexity of operations
To learn more on the subject and get some tips on how a business is transferred, read our article: “Business transfer: A seven-step guide.”
Clearly communicate at every step
Communication is key during a takeover. It promotes decision-making that will satisfy all stakeholders: those who take over the company and those who give it up.
It also clarifies everyone’s expectations and roles. It’s even more important if there are several children in the transferor’s family.
No topic should be avoided. Think about:
- Roles of successors and transferors
- Purchase terms
- Length of the transfer period
Define the roles in the family business
Members of a family business usually play more than one role. Each person can be a:
- Family member (child, parent, sibling, etc.)
When one person takes on more than one of these roles, it’s important for them to know which hat to wear and when. They should also try to avoid mixing business with family relationships.
For example, a manager might carry over their anger about a family fight to a business meeting.
To avoid any tension, it’s best to clarify everyone’s role before, during and after the transfer of the family business.
Train successors to optimize the succession
The skills of the entrepreneurs’ children can vary dramatically. Business may not be their cup of tea. That’s fine too!
Make sure that taking over the business suits their personal interests and objectives. This challenge must interest successors, who must also have the relevant skills.
Take into account intergenerational differences
The business vision can vary significantly between different generations.
Successors and transferors don’t necessarily have the same approach in how they do business nor do they have the same vision for the business.
Different viewpoints can lead to tension, especially when the transferor has trouble letting go and leaving and the successors are impatient to make their mark.
Since work methods are changing, make sure that the successors and transferors share the same core values. For example, what are their thoughts on:
To ease tensions and prevent disagreements, rely on strategic planning and communicate continuously and openly.
Consult the family business succession checklist
- Make sure the transferor is truly ready to pass on the business to the next generation.
- Make sure the future generation has the skills and will to take on the family business.
- Clarify the company’s mission.
- Define each person’s role and responsibilities.
- Start planning the business succession as soon as possible
- Work on the successors’ lack of knowledge or experience
- Communicate clearly and frequently
- Learn to deal with unexpected events and adapt to change
Taking over the family business can be a stimulating challenge and a golden opportunity to run your own business. Make sure you’re well supported so that the transition goes smoothly for everyone involved. Ready? Discover the steps to buying a business