That is an extreme example, but battling the belief among staff that you are acting in a way you could not if you were not family is a challenge to be overcome.
- Ensuring family members have the right expertise, experience and credentials.
A business would not hire a non-family member without the right qualifications and experience or promote someone without having proven their worth. So do not be afraid to ensure that a family member being ear-marked as part of the succession plan is given the right training and the chance to have the right experience.
This can even involve them starting in a different career or at a different company. I have seen family members qualify and work at professional services companies, learn their trade and their profession, and then take that experience back into the family business. Allowing a family member time outside of the family business will not prevent them being part of the future if it is managed correctly.
But what if the plan is to sell the business?
For some family businesses, the right decision is to sell the business rather than create and implement a succession plan. The decision to sell can be a hard one and most family businesses are unlikely to have gone through a sales process before.
Getting to the point of selling the business can come from a number of factors, which might include:
- Demand from different generations with different expectations.
The classic tension in a family business is the leading generation being focused on capital growth and wanting income, while the next leadership generation is less concerned with income and want to ensure money is invested in the business.
The generations behind that are often encouraged to pursue other ventures, which can result in them not being overly concerned with the future of the business itself, but happy to receive healthy dividends or a slice of the proceeds of a sale.
When this occurs you are either going to have to come up with strategies to meet all competing demands – perhaps an internal market within the family to buy shares so that cash is available, or to ensure that appropriate trust structures are put in place that will provide access to funds when needed for the family – or it is likely the business will come to point of conflict within the family and need to be sold.
- The challenge of taking a business in a different direction.
An industry might have to re-invent itself, a business may have to pivot, a sector may become unfashionable and in those circumstances sometimes the honest answer may be that a family business does not have the expertise, the energy or the desire to change the business to adapt. In this case, selling to someone who can might be the best option.
