There are many reasons why first-generation family business owners often delay the inevitable—namely, the transfer of responsibility for the business to successive generations. I've worked with many owners of family businesses who felt their children just weren't ready to take over or that their legacies might fade in the hands of an outside buyer. In many cases, first-generation owners have spent most of their lives building the business and are uncertain what life might look like otherwise.
These motivations for stalling are understandable. After all, it's tough to draw a line between one's identity and one's livelihood when the two have been intertwined for so long. Successful family business owners are very often successful precisely because of the emotional attachment they develop to their businesses. In some senses, the business is the family.
Nevertheless, there are pitfalls to putting off succession planning. Consider the following.
- Disenfranchised NextGens. Any successful business relies on workforce engagement. That can be hard to maintain if the first generation appears reluctant to give the second and third generations their turns at the helm. I've seen leaders in their 80s or even 90s continuing to hold control for so long that their children feel stuck in their positions, if they haven't already left. Over time, this seeming lack of trust can erode morale, generate resentment, and leave the next generations in line feeling disenfranchised.
- Arrested innovation. Organizations thrive on bringing new ideas and perspectives to the table. Preventing the second and third generations (not to mention outside parties) from assuming leadership positions is a sure-fire way to stymie future growth. Without diversity of thought and room for innovation, businesses lose their competitive edge and begin to stagnate.
- Knowledge roadblocks. The transfer of knowledge and skills from the first generation on down is a critical step in power transitions. Yet if succession talks aren't even on the table, it's likely that younger generations aren't getting the training and guidance they need to prove their value. As a result, the assumption that they are not ready to succeed their parents becomes a self-fulling prophecy.
- Cultural tension. Employees can sense tension among the ranks. It's hard to keep morale up when younger generations feel resentment toward the older ones, and it's hard to keep non-family employees engaged when family drama is in the air. Therefore, even if succession is not yet pressing or even an option, families need to engage in open and honest conversations and set clear expectations—and do so as early as reasonably possible. Otherwise, lack of a future vision can become fertile ground for ill-informed rumours and assumptions.
- Diminishing returns. Life is about rise and fall: we all grow and hopefully flourish and eventually decline. There is always much to learn along the way—and just as much to teach. Meanwhile, admitting that someone else might have the energy and skills and passion to propel the business forward isn't a weakness. It's an acknowledgment that a business must evolve and that no one person can lead the way forever.
It is true, though: giving up control is never easy. Nor is it meant to be. Ready or not, however, every family business owner must eventually face the reality that it's time to move on. But as I've said before, succession planning is a journey. Starting the process sooner rather than later not only allows the next generations to shine but also ensures that legacies thrive for generations to come.
Stay up to date with what matters to you
Gain access to personalized content based on your interests by signing up today