It is not uncommon for the founders of a family business to find it difficult to let go. After all, they spent years of hard work, dedication, risk and passion to build the business, often viewing it as an extension of themselves.
We often get asked “what will I do without the business?” or “how will the business perform without me running it?”. These questions can deter founders from addressing the topic of continuity planning and often creates conflict between them and the rising generation.
Welcoming the next generation
In many instances, founders make repeated promises to retire and invite the next generation leader to take over the family business. Then both generations, motivated by good intentions, engage specialists for corporate governance to help professionalise the family business and ease generational transition issues.
Everything looks positive until the founder struggles with the reality of delegating authority to the next generation leader. Undoubtedly, founders make a conscious effort to hand over the reins, but the conflicting emotions of doing so make it a challenge.
These emotions not only put a strain on parent and child relationships, they can also instigate the downfall of a long-standing family business. As the next generation comes into the business, they are eager to prove themselves in doing things differently, bringing onboard innovative ideas and changes to the organisation and striving to generate profits. If they are constantly challenged and frustrated by the founder’s intrusion and lack of confidence in them to have the freedom in running the business, it can cause tension.
Achieving a smooth transition
Continuity planning takes years, not months. Educating the next generation with the right skills and knowledge and creating a roadmap for continuity, increases the opportunity to drive business longevity and wealth preservation.
We understand the unique challenges of running a family business. Our family business advisers draw upon their extensive education, research and accreditation to help you navigate challenging circumstances. If you would like to discuss your unique situation, please contact your local BDO Family Business adviser.