Build, manage, destroy – the different generations of family business owners
We have an old Swedish saying on family businesses; “förvärva, förvalta, fördärva” that translates to above heading. This refers to the challenges meeting three consecutive generations of business owners.
Unfortunately, the odds for success are low, hence the old saying. Studies indicate that only 30% of family business survives the second-generation of entrepreneurs, and only 10% survives the grandchildren.
Some of the professional skills needed to run a family business can be taught at a technical university or a business school. Still, challenges facing the next generation includes soft factors such as a genuine nerdy interest in the specific trade, innovation and possibly drive.
There are exceptions, as always. I.e. prospering family business passed along to the next generation of propietors.
Here are some advice to increase the odds for family business success:
- Education, be it technical and/or business school.
- Introduce family members early on to the business. Nurse interest.
- Use apprenticeship methodology. I.e. on-the-job training of all parts of the profession.
- Practice to let go. Things will get done albeit likely with a different solution. Mistakes is part of the learning process. The next generation might even innovate the business.
- Evaluate talent. All persons are performers, the trick is to find each person’s specific interest and profession.
- Recruit and appoint complementary skills needed.
- Find a trusted long-term adviser or independent director early on, relevant to parts of the trade. A bridge between generations. A consigliere, for lack of better words.
The founder is the company. There is an element of civil servant as soon as the next generation is introduced to the family business. Have faith thought. Almost all businesses go through different evolutionary processes regardless of the proprietor. Hence, different business owners might not be that bad in the long-run. Companies that survive and prosper long-term reaches and adopt to different plateaus. Such ownership independent plateaus can be changing customer preferences, economics or different stages of growth of the actual business.
The trick to successfully operate through generations is not to develop the family business as such but to nurse the nerdy interest of the trade. I.e. to bridge the two generations that inevitably will be different. Be open minded, nurse interest in the family business. Be a tutor for the next generation while practicing to-let-go.
Thank you for reading. Please feel free to like, comment, share, tweet, email, etc. Hopefully the Pareto principle, also known as the 80-20 rule, will apply. I.e. 80% agree and 20% will give a constructive challenge.