There are many reasons why people choose to start a family business, such as flexible working hours, job creation, learning new skills and more. However, most of the reasons why people start family businesses revolve around creating a legacy that can be passed down to the next generation.

Reasons such as building wealth for future generations, transferring family values and strengthening inter-generational bonds all form the bedrock of family businesses. However, statistics show that most family businesses do not get passed down through the generations as planned. The embedded infographic looks at some of these statistics.

One of the key reasons many family businesses end up being unsustainable in the long-term is a lack of thorough succession planning.

Start Succession Planning Earlier

Many business owners believe that succession planning is something to start thinking about once they are close to retirement age and ready to pass the baton to the next generation. However, the earlier the transition is planned for, the more likely it is that it will be a success.

Long-term planning ensures that the offspring who will hopefully take the reins will have plenty of time to familiarise themselves with the business and the tasks they will be undertaking once they take over. It also allows other employees to feel comfortable with their future managers.

Demonstrate Accountability

One hurdle many family businesses face when planning succession involves the views of other employees, who may see family members as having less accountability than themselves and become resentful.

When potential successors are brought into a company early on, they can prove their accountability and their suitability for the role. This way, other employees can see the time and effort being put in.

It can also help to encourage potential successors to gain additional skills and knowledge, such as obtaining a relevant degree or even working somewhere else for a while.

The short video attachment looks at some of the best degrees for business. 

Hire from Outside

While family business owners may be keen to pass the mantle on to the next generation, there should be scope to bring in additional talent from outside the family into senior roles within the business and even on the board.

Attorney-at-law Dr Edgar Paltzer counts family business succession planning among his preferred areas of practice, and he has extensive experience in assisting all types of family businesses in creating a viable succession plan.

You can learn more about how to develop a family business plan by taking a look at the PDF attachment to this post.