To keep a successful family business on its feet for years to come, it’s essential to have a plan for future generations. No matter how well your business has done or how long it has been around, with new years come new challenges. To keep the business growing and adapting, the future generations have to be prepared to make the right decisions and implement the correct strategies by learning from the older generations.
Generations Working Together
The best way to prepare the future generations to take over the family business one day is by working together early on. Simply passing along the business and hoping for the best is not enough. It’s essential for generations to work alongside one another and learn from each other. The older members of the family obviously have expertise and wisdom they can pass down, while younger generations will have new ideas to adapt to the changing times.
By working together, each generation of the family business can begin to move forward together. Rather than just passing the business along, there is a continuous line of learning from previous success stories and the trying out of new strategies.
Define and Assign the Business Roles
As you introduce the new generation to the family business, it’s essential to assign roles early on. Chances are, there is going to be more than one family member coming into the business. To avoid confusion or friction later on, be sure everyone knows their current and future roles in the business. For example, who will take on complete ownership when the older generation retires.
It’s also important to define these roles so they understand completely what their responsibilities are and what it means to the business. If they don’t have a clear and innate understanding, it can easily cost the business in the future.
Understanding the Basic Financial and Business Concepts
Outside of each of their assigned roles, every member of the family business must understand the fundamentals of the business’s finances and concepts. Meaning, it’s essential they know the financial history of the business, how healthy the business is, and its growth opportunities. When family members don’t understand these basic concepts, there’s bound to be misunderstandings concerning dividend distributions, compensation, operating reserves, and much more.
To pass along knowledge of the business’s concepts, give the younger generations opportunities to learn more about marketing, sales, revenue, expenses, and how to make a profit. Teaching the younger generation these key fundamentals is key to creating a sustainable future for the family business.