Why handing over the business from one generation to the next needs a plan.
Having a family business that you can join can seem like a piece of good fortune. But for second, third and future generations it could be a mixed blessing. The BBC1 drama, The Pact is a perfect example of how family dynamics can be challenging.
Failing to plan is planning to fail.
A fifth generation son, took over control of the family business from his father. He then passed control to his son. Unfortunately, he had little interest in the business. At the time his sister, who did work in the business, was overlooked.
This led to all manner of resentment by both parties with accusations of misuse of company cash, lack of respect and general workforce underperformance. Tension can also arise where family members who work and contribute to the business do not get a fair remuneration that reflects their efforts.
Medium to long-term, this lack of succession planning can have disastrous consequences for the business as well as putting an unnecessary strain on family relationships.
Although this reluctance to plan for succession may arises from the inability to make choices between children, a well-run business needs the right people doing the right jobs. There is no reason why ownership shouldn't come from within the family, but it should come from desire rather than a sense of duty.
Key considerations of successful succession planning
Sitting around the table and putting a suitable plan, or Family Charter, in place from both a business and family perspective can be the difference between a business realising its future potential, decline or even failure. As The Pact highlights, understanding the consequences of any Family Charter is crucial. Those families who do successfully pass their family business on having put the right measures in place stand a good chance of seeing their family business go from strength to strength.
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