There are some universal elements to running a business. You need to do the thing you do. You need to manage the doing of it. And you need to be able to sell and market the thing that you do so that you can do it for more people. At the very least you need to replace those clients whom you lose through natural attrition. And if you fail to make a profit then you’re in trouble.
Typical challenges facing all businesses include:
* The Quest for Growth: With the improving economic environment many businesses are planning on growth. Are you optimistic about the future fortunes of your business?
* The Need for Skilled Staff: Anticipating growth and being confident about is all well and good. But what about your capacity to deliver what you think you’ll sell? To the requisite level of quality? Many businesses are apprehensive over being able to recruit the skilled staff required to achieve that growth – a trend that’s on the rise. Are you confident that you can get the right people to help fuel your growth? That you can attract them?
* Retention: You need to attract people with the required skills to fuel your growth. But what about your existing people? Are you concerned about retention? The cost of turnover? The retention of skills and talents is another key challenge.
* Conflict: All businesses need to deal with conflict – be that between employees, or between the business and various stakeholders – clients, suppliers, lenders, etc.
But not all business types are the same. One category facing special challenges is the family business – many of which we number among our valuable clients. And the most significant type of conflict that family businesses need to deal with? It’s succession – with only a minority of family businesses having a discussed and documented succession plan in place. How does your business stack up in terms of succession?
Given the significance of succession for family businesses, it may be helpful to look at some of the factors associated with succession. There is of course the expected issue of younger people being confidently opinionated and the expression of those opinions being sometimes challenging to their elders. But there are other factors too:
* They are very highly educated – typically more so than their parents.
* Some of them want to take hold of the reins sooner. This can bring succession issues to the forefront sooner than the older generation expects – or wants – or is prepared for. And many of the younger generation believe that the incumbents will have difficulty in letting go.
* Many of them have worked outside the family business before getting actively involved. They bring experience from other organisations with them. A synthesising of ideas is needed and that, albeit hopefully constructive in the longer term, can be disruptive in the shorter term.
* They will not be satisfied by acting purely as custodians. They want to make their mark. They may have Ideas for new products and/or services. They may also want to sell into new geographies – including overseas – which opens up a whole new range of issues such as ecommerce, additional offices, exchange rates, dealing with Enterprise Ireland, etc.
* They may not want to work fulltime in the traditional family business – perhaps wanting to drive some other business in parallel. This challenges the incumbents to think of the business as perhaps an umbrella of businesses rather than a single enterprise.
* They are also more tuned in to digital – an area that some of the incumbents can find intimidating – and irksome. Older custodians will have grown up in an era where selling was largely thought of as an outbound activity. The next generation believe that digital marketing can help draw in potential clients rather than having to always proactively reach out to them to persuade them to buy.
The common theme here? Confidence and ideas. The older generation can look at the glass as being more than half full – or the opposite.
What if the parents humbly but confidently feel that their offspring simply don’t have the calibre? They can of course love their children – but also feel that the children will never be able to deal with the obstacles that they themselves have successfully hurdled (or bypassed). They may definitely see their children as owners of the business – but not as the people who’ll be able to take over the running of it. Indeed, the parents may have been enlightened enough to recruit people better than themselves and to have handed over or be in the process of handing over the business to be run by an outsider. What might that do for family dynamics?
Or if the parents are intent on handing over the business to their children – but there are multiple interested siblings?
Or if one of the offspring has assumed a de-facto leadership role without anything having been formalised? That person may have presumptions – presumptions not shared by their siblings and/or parents.
These are examples of uniquely familial soft issues – issues compounded by longstanding dynamics sometimes stemming from childhood.
The family business and its transition to the next generation needs careful navigation. It needs expert advice. Many of our clients, large and small businesses here in the Waterford area and all over Ireland, are family businesses. As their financial adviser we have gained broad and deep expertise in this area. For discreet, expert and nuanced advice please contact us by phone at 051-877 155 or by email at email@example.com.
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