One of the greatest barriers to a successful transition is a lack of wealth.
As families grow, so too must businesses grow and adapt to meet the needs of the changing family. The eye of the current leaders must always be to the future and the impact of family on the business. Unfortunately, succession is usually not considered until it’s already too late to fix any shortcomings in this respect.
Consider the following example:
‘The business was founded by my grandfather, and has now passed over to his three sons, that is my father and two uncles. Between all of them they had 10 children: seven boys and three girls. I’m one of them and we are all now mature adults and well into building our own families and careers. At present count, there are some 25 children, in what l suppose is the fourth generation. Yes, we all like larger families!
We are talking succession at present across the families as Dad and my uncles are well into their 60s and 70s. Our business has been very successful to date and provided extremely well for the families.
When formed it provided for one family. Then that grew to four families. Now there are thirteen families that it provides for. We don’t all work in the business but we all benefit from the profits it earns and the dividends that flow. We don’t know what our children will do in the future but we know that the business will need to evolve.’
At some point, as in the example above, there can become a disconnect when the family grows more quickly than the business can accommodate. Individual wealth per family member begins to dilute. This is a possible long-term outcome.
But in the short-term, the impact of family growth and needs on the business’s financial capacity must be considered if a legacy of business succession is to be maintained. This requires a growing business with active family participation and that doesn’t happen overnight.
As you see your family growing, engage them actively to support the growth of the business.
Active Knowledge Questions:
How many mouths may your business need to feed in the future?
Does it have the financial capacity to do this?
If not, how will you grow the business to meet future family needs?
Searching for the world’s best succession guide? Buy Transition – Orienteering The Five Lands of Succession.
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All the best in the success of your business,
Richard Shrapnel
