From traditions to jewelry, generations have inherited what their families consider to be most important. While some parents pass down a secret recipe or priceless watch, others will hand over the family business.
Family owned businesses make up 80% to 90% of all businesses in North America. Although continued family control has been known to create longevity, there has been a large decrease in a business’ survival rate as the generations go on. The highest rate of success lies within the second generation with more than 30% of businesses in operation. Only 12% of those companies will still be running into the third generation, and only 3% will be viable after that. A smooth and effective transition from one owner to the next is vital for the prosperity of a family owned business. Anago is now a second generation run company that continues to see record-breaking growth. Due to the company’s success as a family owned business, here are tips to keep in mind when it’s time for your next generation to take the reins:
Create a Succession Plan
A well laid out plan should be arranged five years in advance and should establish goals, processes, and timelines to create a vision for the business and position it for continued success and growth. A progressive strategy will allow clients and employees to get accustomed to the change in leadership while helping the successor adjust to the shift in responsibilities. It is also a time to talk through unexpected external and internal changes such as the economy, market, trends, technology, and expansion with the new generation.
Even with a succession plan in place, finding a balance will take time. In a family business, the line between work and home is thin that will most likely be crossed if no boundaries are set in place. Fully letting go of the business for the previous generation may be difficult and it will be up to the newcomer to take steps in correcting the issue to better the manage the dynamics.
Foster Employee Relations
It’s not uncommon for the inheritor to encounter a staff still used to the “old ways” and how things used to be. It is important to ease employees into new changes, earn their trust, and create a business culture that excites them for the future. Make sure the team feels comfortable with the new leadership and always welcome feedback on ways to improve. Good morale will increase positivity and in turn continue the company’s success. Cultivate new relationships and make sure to only strengthen previous ones.
Adam Povlitz, Anago’s President, was recently named a NextGen to Watch by Family Business Magazine and has helped grow his father’s company into a nationally acclaimed commercial cleaning franchise. The successor of the company should always create their own presence but still stay true to its founding roots. As the business gets passed down, the following generations must work harder than before to beat the statistic and continue the family’s success.
If you are interested in learning more about running a family business or would like to inquire about Anago’s Master Franchise model, please contact Judy Walker at email@example.com.