Family Business Succession Planning: The Need of Today
Family Business Succession Planning: The Need of Today
Succession and Retirement Planning
These are the two sides of the same coin, first generation who have spent all their life working in the business dont want to get retired. they must change there role from Leader to brand ambassador for the betterment of the company. Family business is a relay race and the transition must be planned and should not be too late.
Family businesses fail to understand importance of Succession Planning. In these companies the key positions are with the owners themselves. As a rule of the thumb, the son of founder owner is deemed / nominated successor of the business. However there is no plan for inducting the next generation into business in proper way.If next generation performs better in academics, there are lots of opportunities in the outside world. These opportunities seem to be more lucrative than entering family business.
Succession Challenges usually faced are
Next Generation is not interested in continuing to work for family business
Next Generation is not as competent as the founder is in the particular market, product or technology which happens to be core strength of the business so far.
(A founder director who has done PHD in Chemistry makes R&D as core strength of the company. Unfortunately if son is not interested in subject chemistry, the core strength gets weakened over period of time if this issue is not attended properly)
When and how to handover the control of business to next generation.
In many family businesses the older generation still tries to dominate or take full control of business even at age of 60-65 when next generation is experienced enough and matured reliably to take on responsibilities.
Mix of generations from founders, either forum of cousins or sons of founder friends. These pose serious questions of control over various businesses or business functions.
The two brothers or two friends who have started the business may never had misunderstandings or disputes over who will control what function of business and how much reward will he take. But the same understanding weakens when next generations get into the family business.