The family business succession planning: pros and cons compared

family-business

The passage of the relay in the company is always a delicate moment. They serve concentration and coordination to avoid mistakes and undo the work done in a short time

What implies a generational shift in the company? Let’s find out right away with analyzing in detail the advantages and disadvantages arising from such change: advantages and disadvantages to consider before handing over the reins of the enterprise to the heirs.

Advantages of generational change

Simplified management

If the company managed to survive at least a generation change, it means that the children of the owner shall not be dealing with closely related issues when starting a StartUp, such as difficulty to carve out their own slice of the market, the inability to relate to the public or the lack of funding.

Sure to keep competitive activity must still demonstrate professionalism, diligence and entrepreneurial spirit, but (certainly) the simple fact of not being forced to start from scratch avoids having to deal with that long series of pitfalls and difficulties that bears 96% of failures within the first 10 years after the opening of a business.

Unconditional support

During the change of generations, who takes over the administration of a company has the good fortune to be able to rely on the support of the predecessors and how the same have built over the years.

Children or grandchildren struggling with the management of a well-established business can then take support from a solid team, allowing them to focus exclusively on the strategies to be adopted in the short and long term.

Social Climbing

Often, those who took over during a generational change in the company is not required to start their career from the bottom to achieve a leadership position in the years: taking over the family business (usually) makes it possible to skip the mess to go directly to covering prestigious roles.

While it is true that such situations lead undoubtedly to the waiver of valuable experiences related to the learning of those who start from scratch, on the other hand it is also true that the children of the owner have the opportunity to absorb the lessons and skills father over the years seeing him at work.

You may also like to read another article on BSOinvest: 3 Steps to Ensure the Success of Your Family Business

Pride staff

Although the passing of the baton in the conduct of a family leads to more responsibilities and pressures heirs, the same are facing the fascinating challenge of managing a business already started, contributing to national economic growth and generating jobs for the community. A task not easy to deal with, but that certainly can arouse strong pride and personal satisfaction.

family-business
Image Source: Google Image

Disadvantages of generational change

Family tensions

Like it or not, every generational change in the family can cause tensions difficult to manage if the father and son are diametrically opposed ideologies or if the expectations of the former owner are not met by the successor, you risk damaging the structure of the domestic core, bringing dissatisfaction and resentment among all the relatives concerned.

Career limitations

The fact of being included in the family business as a result of a generational change is for the heirs a limitation in the career possibilities : if he had not made the need to replace the role of the father (or the first holder), children and grandchildren would easily have chosen to take different roads, specializing in other areas that interest them most.

Identity crisis

There are many cases where, during a business generational change, the successor suffers from the fact of being alone always regarded as the son or grandson of the first owner.

Situation that in the long run, in addition to causing the new entry a real identity crisis, it can also degenerate leading employees, suppliers and customers to oppose their own inclusion, considering the substitute as a figure not up to expectations.

Inability to gain experience

The finding of the blue to manage the feat of taking over the family in previous generations, in some cases forcing interested parties to completely skip all initial steps that allow young workers to gain experience and skills essential for their professional training.

Useful tips to better manage the generational shift

To deal in the best way a generational change in the company should

  • Produce a new business plan the activity to administer, by entering inside their own point of view to see if the family management of the company is seen as an opportunity tempting, rather than as a commitment that we do not want to take charge ;
  • Create a five-year succession plan with the owners output to learn the craft, working side by side with the initial team and being led by the founders;
  • Talk openly about potential challenges and engage the first generation in the objectives to be achieved;
  • Be flexible, to avoid (at least initially) excessive distortions and, above all, make sure that their intervention will lead the legacy left by their predecessors toward a prosperous future.

These all the pros and cons of a generational shift in the company: advantages and disadvantages to consider carefully before giving the baton to successors.

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