Growing Up in an Entrepreneurial Family
When a family owns a business, that business can dominate conversations at the lunch table to such an extent that it feels like it takes on the role of another family member. As the child of an entrepreneur, you grow up with this constant presence of the business. It shapes who you are. During adolescence, there may come a phase when the growing children want to “break free” not only from their parents’ home but also from the family business.
Training to Become a Family Business Owner?
What follows in the lives of potential successors is the training phase. This may—but does not have to—be related to a future role in the family business. Sometimes, the ambivalent relationship with the business that began in adolescence continues into this phase, and the next generation chooses a career path that has as little connection to the business as possible.
In my experience, there is hardly a career choice that does not, in some way, contribute to taking on a leadership position in a family business. Those who train to become actors hone their speaking and performance skills. Trained nurses generally possess strong interpersonal skills. There is little reason not to broaden the range of educational options.
Establishing Succession Capability for the Business
Traditionally, family businesses have been centrally managed by a single entrepreneur and have therefore been highly centered on that individual. Establishing the company’s ability to ensure a smooth succession now involves creating a decision-making structure that is less dependent on any one person. This not only initiates a structural change that may be necessary anyway. Starting organizational development early also makes it easier for the next generation to grow into their new leadership roles, because a more decentralized structure distributes the burden of leadership across multiple shoulders and fosters a more equal dynamic.
Why is this so important?
If the family business positions itself to be less dependent on specific individuals, the entire succession process benefits. At this early stage of succession, it is not yet clear whether the internal generational transition will actually succeed. Should succession within the family not materialize, the company will still be able to function effectively thanks to the newly structured leadership levels. This timely reorganization also relieves the next generation of the pressure that the company can only survive with them at the helm.
Selecting Successors and the Succession Model
Things are now starting to take shape. But before the next generation joins the company, the right succession candidate must be found. There may even be several candidates from different branches within the entrepreneurial family who can envision taking over the leadership of the family business. In the latter scenario in particular, it is helpful to have established objective eligibility criteria for succession in advance. This removes emotion from the entire selection process and helps preserve family harmony in this challenging situation.
Typically, such a requirements profile can be found in the family’s strategic principles or in a family constitution. If one does not yet exist, initiating the business succession process can be a good time to jointly draft a clarifying family constitution.
During this phase, the question of the right succession model also arises. Will it be a traditional line of succession, or might a dual leadership structure be the more suitable management model for the next generation and the company? Only once this preparatory work has been completed to everyone’s satisfaction can potential successors begin their transition with the help of a handover roadmap, and the succession be implemented in concrete terms in a second phase.
