I am part of a family-owned business that spans four generations. The business founders, now in their early 80s, built it up to be the thriving enterprise it is today. Now they have handed over the reins to their children.
This transition brings tremendous challenges as every generation has their own way of working.
The way the owners did the books for example, was to hand the accountant bags of paper. The new generation now managing the company sees the importance of putting it all online. They recognize that vital information simply can’t be in paper form because it has to be accessible in real time, all of the the time, for reporting and tax purposes.
Better organization (i.e. from paper to automated) and a strong foundation are vital to grow. That’s why it’s imperative the future generation learns business management skills, builds on established infrastructures and ensures they understand the many regulations related to their industry. How does one orchestrate all these generational needs effectively?
Give Everyone a Vital Role in the Process
“When I quit working, I’m dead,” one of the founders said recently. He truly fears that without ability to add value (in his case, working hard), he is rendered useless. Don’t put them in this position. Give them a vital role in the success of the business. For this company president, it meant giving the founder oversight of all maintenance, which lifted a huge burden off his shoulders.
Put One Person in Charge
While everyone can help, you need to have a primary decision maker. This is key to avoid cross-generational conflict, as well as avoid “medusa” management principles. The vendors, suppliers and customers of the business need to know who this person is in order to facilitate consistent and clear communications. Imagine, if you will, a crowd-sourced contract and the damage it could inflict. Not having this leader opens the business up to tremendous risk and costly mistakes.
Tap Into Others for Industry Best Practices
What worked yesterday won’t work today. One way to keep on top of new trends is to ensure you are listening not only to family member and business founders, but also to others who walk in shoes that look like yours.
It’s Business, Not Personal
This small company has had the same property manager for the past 12 years. While he’s a wonderful person, they struggle to get him to embrace digital business to expedite the handling and processing of vital documentation. In order to drive the business forward, they need to make the leap to a new one but the founders aren’t comfortable doing so because of the long-term relationship. Businesses need to recognize that sometimes moving forward requires introducing not only new methods, but also sometimes new resources too.
Share… But Not Everything
If you are mortgaging your home to pay for an unexpected business expense, you may want to tell your spouse. On the flip side, unless you run a nursery, hiring a new gardener most likely doesn’t warrant a family meeting. Open sharing of the right things will ensure there is minimal conflict, and those that need to be involved are at the right time. Complex issues are cited as one of the three top reasons family businesses fail, so every business needs to ensure they stay on top of them. This means they need to be supported with effective tools that are simple enough for the 80-year-old to grasp but also scale for the future.
To succeed in a cross-generational business setting, each generation involved has to be open to change. The founding generation needs to feel that they aren’t being pushed out and that their opinion is highly valued. The sandwich generation (who generally is given the role of orchestrator) is stretched in all directions. They not only have to deal with the ever-changing tax and regulatory changes, but also carry the weight of making the right decisions — ones that all will be satisfied with. It’s a huge responsibility and undertaking. In addition to all the external pressures a business owner has, they serve as peace maker cross the generations to help the business thrive and grow.
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