Taking Over a Family Business Can Help to Maintain the Goodwill of the Customers.
Whether you're thinking of taking over a mom-and-popular store or a larger functioning, it's important to recollect long and difficult most the implications of carrying on the family business.
Before long after my husband graduated with a degree in chemical engineering, his dad decided to retire from his thriving chemical distribution company. Unexpectedly, Steve had a decision to make: Did he want to have over the family business organisation?
Information technology was an heady, but daunting, prospect that led to a lot of research and deep reflection. And Steve certainly wasn't lone. Family-owned businesses apply lx% of the U.S. work forcefulness and generate 64% of the Gdp. Yet only 30% of family businesses reportedly survive the transition from first to second generational ownership. Yikes.
How exercise you lot make the conclusion to take the spring—or not? In this commodity, we'll walk through some pros and cons of taking over the family business. Then, we'll get out y'all with some tips to help you lot work through your ain controlling process and best practices for making the changeover.
Taking over the Family unit Business organization: The Pros
Ready-Made Success
Starting your own concern is a risky proposition. First of all, initial struggles oftentimes take years to sort out. Yous have to build a clientele, secure suppliers and employees, and establish a foothold in the marketplace. Not to mention figuring out systems like accounting, it, customer relationship management and other infrastructure.
Inheriting a family unit business is kind of similar starting to climb Mount Everest halfway up. Information technology certainly takes hard piece of work, diligence and some entrepreneurial spirit to keep the climb on track. But you lot've got a huge advantage on people who showtime from scratch.
Built-in Support
When taking over a family business, all of the background has been laid for you. Every bit a result, yous're free to conduct "business as usual" while you explore new directions the company could take under your leadership. If you're lucky enough to inherit experienced employees who understand the ins and outs of the business, you'll have an easier fourth dimension with your transition.
Plus, having the ear of the one-time CEO anytime you want is a huge bonus. This will help foreclose making disquisitional errors, which—for a business organisation in its infancy—could come at a huge cost.
A Mid-Career Start
Most of u.s. beginning our careers at the bottom and spend years working our mode to a position of leadership. Taking over the family unit business allows you the flexibility to skip the grunt work and get right to the good stuff. While that might mean missing out on valuable learning experiences, y'all've got the aforementioned quondam possessor on speed punch. With them handing down the hard lessons, yous won't make the same mistakes.
A Career with Meaning
Owning a concern, contributing to the economy and providing jobs for your community is a fulfilling way to earn a living. And at that place's an boosted element of pride when you're carrying on a tradition.
A Business concern with Cash Flow
Starting a business from scratch requires capital. And it can take years before an entrepreneur starts to brand money. If your family unit's business is already thriving, instead of worrying almost cash flow, you can prepare your mind to growth.
And, if your plans to aggrandize or create efficiencies require business loans, a business organization with a proven track tape volition make the process of getting funding significantly easier.
Taking over the Family Business organization: The Cons
Family unit Tension
Are you prepared to talk business concern at every holiday, family dinner and on each phone telephone call? Piece of work-life balance is tricky for all entrepreneurs. Taking over the family business could crank that challenge upwardly several notches.
The pressure comes from both sides: You might be looking for legacy data at every opportunity and/or your parent might feel the need to micromanage or want to exist notified of every modify. What if you decide to take the business organization in a different management—i that your parent may non approve of? Talk about family tension.
Career Limitations
With bully ability comes nifty responsibleness. Condign an employer and taking on a legacy performance locks you into a career, eliminating the possibility of a seamless transition to other piece of work possibilities. Taking on the family unit business narrows your potential career path.
Bottom line: If you're doing work that you love and find fulfilling, that's great. If not, you may be losing out on the potential to detect meaningful piece of work on your ain terms.
Identity Crisis
If you're jumping into the family business, you lot'll perpetually be known every bit the owner's offspring. While there are advantages to that lofty position, there is the possibility that yous'll have to manage an identity crisis. There's also potential for friction with established employees, suppliers and clients who may believe you haven't earned the correct to be the boss.
Business Readiness
In Steve'due south case, a fresh engineering degree was non a great qualifier for becoming the president of a mid-sized company. While he understood the business to some extent, he hadn't apprenticed for his dad and certainly didn't have business experience or training. If you don't have business training or experience in the industry, the learning curve could be steep.
Making Your Own Decision
Now that yous have a adept understanding of the benefits and drawbacks of taking over the family unit business, the adjacent stride is to make an bodily decision. And you and yous lone tin can determine if it's the right decision for you lot.
Hither are ii tips to aid you weigh your options:
- Describe up a mock business plan for the company nether your management. The act of writing your vision will clarify your thinking and assistance you decide if you're excited about the prospect of building on your family'southward success—or if it feels like a brunt you'd rather non take on.
- Talk openly about potential challenges. Ask tough questions of your retiring family unit members. Some families even invest in family counseling to assist with the adjustment.
Five Best Practices equally Y'all Accept the Reins
If you're excited at the prospect of conveying on the family business concern, try these best practices to help with the transition:
i. Succession Planning
Create a five-year succession programme with the outgoing owners. This volition allow y'all to work alongside your family unit to learn the business, brand some small changes of your own and constitute trust with employees, suppliers and clients. Plus, your family will adjust to the idea of taking a less hands-on leadership part, which will help with their transition to retirement.
2. Shadowing
For larger businesses, shadow primal employees to truly sympathise all aspects of the operation. That will include managers, merely also front end-line staff, too. At FreshBooks, all employees spend a week in client back up to understand customers' pain points and the product better. You may make fresh discoveries that let you to lead in a more than informed way.
three. Flexibility
You're not starting your ain business—you're carrying on the legacy of someone else's vision. That doesn't mean that you can't make information technology your own in time, merely it's important to be respectful of the original business' integrity. Consider building on established success rather than taking a sharp turn in another direction, at least at the outset.
four. Advice
Talk openly with current employees about how to maintain the company culture. Whether you're a familiar fixture in the workplace or non, employees will naturally be concerned and curious about the changes your leadership will bring to their job. Even if you have plans for huge changes, take it ho-hum and introduce it in waves, not all at in one case. Staff demand fourth dimension to adjust and transfer their loyalty to you lot.
v. Personalization
On the flip side, consider how you might make the family business your own. For case:
- Could information technology use a digital makeover?
- Are in that location outdated systems and processes that could be improved?
- Who could you hire or partner with to help you abound the business organisation?
Decision
In the end, my husband Steve chose not to take over the family business. Twenty years afterward, he'south the co-possessor of his own mid-sized chemical company, proving that if the drive for entrepreneurship is strong, yous will forge your own mode. (And preserve the relationship with your family unit in the process.)
On the other mitt, who knows what success and fulfillment Steve could have found past carrying on his begetter'south legacy. The choice to have over the family concern—or not—is as private as people themselves. Practice your enquiry and follow your gut.
This post was updated in April 2020.
nearly the writer
Heather Hudson has been a freelance writer for more than 17 years. As a small business organisation possessor, she understands the triumphs and challenges of life as an entrepreneur. And as a longtime FreshBooks customer, she'southward always looking for means to piece of work smarter, not harder. You can learn more about her piece of work at heatherhudson.ca.
Source: https://www.freshbooks.com/blog/taking-over-family-business
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