Taking Over the Family Business? Here Are Things to Consider
If you’re planning to take over your family business, chances are you’re experiencing some mixed emotions. While there are elements of excitement and pride, you may be feeling some pressure. Not only do you want the business to survive, you want it to thrive.
Ask anyone who’s taken over their family business, and it’s likely they’ll tell you it came with its share of challenges. But, if you take proper measures to prepare for the transition, you can start off on the right foot and make sure you’re set up for success. As you plan to take the reins, here are four things to keep in mind.
The sooner you start succession planning, the better.
Believe it or not, family businesses employ 60% of the workforce and create 78% of all new jobs. Those are impressive numbers, but, perhaps surprisingly, only 30% of family businesses survive the transition from the first generation to the second generation. We’re not saying this to scare you — there’s huge potential for success with a family business — but to realize that potential, you need to start with succession planning for a smooth transition. Flesh out a succession plan as early as possible. Figure out key details, such as who’s going to take over management and how ownership will be transferred. As you’re figuring out your plans, make sure you have an open dialogue with family members so you can set clear expectations.
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Change doesn’t — and shouldn’t — happen overnight.
While you’re carrying on a family legacy, you likely have your own vision for the company’s future. When you establish a succession plan before you take over ownership, you can make your intentions for change known within your family. As you learn the ins and outs of the business, you can start to introduce small changes as you build trust with employees, vendors, and clients. If you implement these changes gradually, you can put your stamp on things while still honoring the family legacy. And by doing this, you’ll give your family a chance to adjust to the transition.
Transfer of ownership comes with challenges.
Regardless of the scenario, transferring ownership of a business can be stressful. And when you’re transferring ownership between family members, tensions can run high, because, well, family. Family members may hold different attitudes toward the business and, as a result, have conflicting opinions about the future of the business. For the family member who’s phasing out of the business, it may be hard to step back and let you take the helm. When it makes sense (and makes life easier), consult outside counsel, including lawyers, accountants, and financial advisors. Not only are they experienced in preparing succession plans, but they’re a neutral third party who can give your family professional guidance — so you’re not letting emotions be your guide.
Ownership and leadership aren’t one and the same.
While you may be primed to take over your family business, remember that ownership and leadership aren’t the same thing. A business owner is just that: the person who owns the business. Depending on the structure of your business, the owner can come with a large share of responsibilities, such as paying the bills, financing the company, and hiring employees. However, if you’re planning to take over the business and lead the company, it requires more than just managing day-to-day operations. You need to have a clear vision. Once you’ve established that vision, articulate it to your employees so they’re clear on their role in achieving that vision. But don’t stop there. To be a strong (and successful) company leader, you need to actively work to keep your team motivated and engaged.
Carry on the family legacy with pride.
When you’re taking over the family business, it can feel like there’s a lot riding on your shoulders. But, with proper planning, preparation, and the right mindset, you can successfully carry on the family legacy and ensure a bright future for your business.
Running a business like Permanent Appeal isn’t an easy feat, but Square is another resource you can turn to. We have all the tools you need to start, run, and grow your business, whether you’re selling in person, online, or both. And we’ve made all our tools work together as one system, saving you time, money, and effort. So you can get back to doing the work you love and focusing on whatever’s next. See how Square works.
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