One in three family companies is handed over to the second generation. If you’re thinking of bringing in a son or daughter, advance planning, focused training and a clear vision can help sustain your business. Hasty decisions and a poorly executed exit strategy can mean years of work down the drain.
For some entrepreneurs, bringing the family into the business is a very good thing. Keeping the business among relatives can present a whole range of problems but it can also be a very good way to create wealth for generations. Family tensions can become especially acute in the transfer stage. Who is capable and who deserves to take the reigns once you leave? Experts say the answer to this nettlesome problem lies in advance planning, training and the vision of your heirs.
Research shows one in three family companies is handed on to the second generation. One in ten lasts into the third generation. More often than not, entrepreneurs arrange their exit strategy through management buy-outs, outright sale or other means. But if you’re one of the few who want to keep your legacy in family hands, advance preparation is essential.
The earlier you get your children or family members involved in the business, the better. If there are several choices, it makes sense to expose each of your potential heirs to every facet of the business. Let them tell you, through their aptitude and commitment, who will be best suited to take over. It won’t necessarily be the oldest child.
Think about training them into all technical aspects of the business. Specialised education may be necessary. Specific university courses of study are a good idea. Their willingness to commit to an intensive degree in your business may also indicate their level of commitment.