The secrets of successful small and medium business succession
Intra-family succession is very common in small and medium family businesses around the world and is the backbone of every mature economy, particularly in the wake of the financial crisis. The reason behind this is obvious; even if children coming from a family of entrepreneurs have pursued different studies and professional careers, in many cases they still perceive the family business as a safer choice, especially with the unemployment that is tormenting Europe lately, in particular. So, what are the secrets to successful small and medium sized enterprise succession?
In order for parent-entrepreneurs to understand the fundamental prerequisites of business succession, they should firstly think as parents. In my family, if my youngest son, who is nine, has an argument with his mother, I always defend my wife in front of my children, then after the fight has simmered down, I deal with the issue at hand. This always infuriates my son, who yells, “you always take Mum’s side”, to which I always reply, “I’m going to grow old with Mum!”.
In the same respect, when my wife and I dream about our children’s future, as parents often do, we remind ourselves that “our children’s lives are not ours, not even at the moment they are born. The only thing that is ours is our obligation to set an example of how we would wish them to grow and evolve”.
These two big truths about family are for me the healthy seed for business succession from one generation to another. The new generation must conquer the business, and indeed life itself, by making mistakes and learning from them, and by using their parents’ example as a weapon. After all, young people may not be able to appreciate experience, but older people are not always fully aware of all the latest business practices and developments. In order to ensure a smooth succession, one must follow certain rules:
As within a family, in a family business the roles and duties should be clearly defined.
Every role should come with responsibility for one’s decisions, which after the conclusion of all deliberations, should be respected.
Both parties need to work on a business maturation plan for the period of coexistence of both generations, which will end with the formers’ complete withdrawal.
The parent-entrepreneurs should have in mind that their children may at some point create their own families, and when that happens, it is natural for them to consider their own families “more of a family” than their parents’ family or their siblings. This is usually a period during which interests are re-defined, so it would be wise to make special mention of it during the choice of the business’s legal form.
It is advisable for parent-entrepreneurs to introduce their children, as early as possible, to the idea that business and work are not life itself, but a theatrical play with distinct roles, lines, rules and direction, and that the business’s financial health is the applause. Children must learn not to take strategic decisions personally. This is particularly tough in a family business.
Our experience with My αriston Manager intra-family successions shows that the above parameters are fundamental for successful transition from one generation to another.