Owning a business in this highly competitive market is complex. Add in the relational dynamics of partnering with a sibling, parent, cousin, spouse, child, or friend, and the complexities multiply. Studies show 70 percent of businesses with family involved fail or are sold in the second generation, and just 10 percent of companies survive into the third generation. These numbers can be alarming if you are the owner, employee, or family member associated with the business. However, you don’t have to be one of the statistics if you don’t want to; you can take control of your future by developing and implementing growth, leadership, and family governance strategies.
When the family is involved in business operations, it is natural to consider the next-gen family as a potential owner successor. However, the next gen often lack interest, focus, or the capabilities to lead the business. The following are common reasons why the next gen may be opposed to joining the business or stepping into a more significant role:
- Fearful of failure, resulting in a timid approach to authority
- Feeling “burned out” due to:
- Long-term exposure to family business operations
- Constant family dynamics “difficulties.”
- Impatience when dealing with close relatives
- Does not want the responsibility for maintaining the business legacy
- No interest in the type or location of the business or options it provides to fulfill personal goals
Luckily, the next gen’s feelings can change in the future. Over the last 50 years of working with business owners, there have been countless circumstances when, after the next-gen has had the opportunity to explore their interests elsewhere, they have been drawn back by their desires to join the business. Interacting with the business as an adult is different from interacting with the business as a child or adolescent.
The best way for the next-gen family to change their views is to work outside the family business for at least two years. If they still don’t want to join, then support their interests and personal feelings. Then, as perspectives change, there may be a place for them in the future, based upon how they continue to grow and how the business grows. Meanwhile, develop Family Member Employment Expectations, which outline the criteria to be considered for employment in the business. A few requirements in these circumstances include:
- The organization must have an open position
- Must have the Behaviors, Attitude, Skills, Knowledge, and Expertise required for the role
- Compensation is competitive based upon the market rate of the open role
- You cannot fail into the family business; you must have a strong work history
The last thing you want to do is pressure your family into the business when they are not interested. But, at the same time, you don’t want to deprive the next gen of an option that could fulfill their interests. Therefore, communication is vital in ensuring everyone is aware of the opportunities and how they may satisfy their interests, and who knows, perhaps they will align!
Contact Us and we can help you with insights, and other resources, and see if it makes sense to work together. At the very least, in 30 minutes, you may get some ideas you can apply to your business right away.
The article was originally published on the Franchising.com website: Navigating Family Business Dynamics With the Next-Gen
Family Dynamics and Family Governance
Family Dynamics and Family Governance
Family and Business alignment is hard to find when business issues liven up family dynamics.
However; with proper process, governance policies, and mutual respect built over time, a Family Business can thrive through multiple generations. Click the following links for more drill-down resources on Family Dynamics and Family Governance.
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We can help you with insights, other resources, and see if it makes sense to work together. At the very least, in 30 minutes, you may get some ideas you can apply to your business right away.