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Experts disagree on whether there is such a thing as an “entrepreneurial personality.” But even those who possess the necessary willingness to take risks and assertiveness must still find their footing in the role of an entrepreneur. This is especially true when they take over an existing business—even if it is their parents’—as a successor. A degree in business administration alone is hardly enough.
Wolfgang Krüger, founding professor at the University of Applied Sciences for Small and Medium-Sized Businesses (FHM), lists five traits that define entrepreneurs: They should be extroverted, resilient, curious, assertive, and, finally, conscientious.
Many successors usually only find out whether they’re cut out to be a boss “on the job”—but by then it’s often too late. To prepare themselves, many are now pursuing a degree in entrepreneurship. There, they can test the waters in a kind of laboratory setting. In addition, some universities provide them with further qualifications that go beyond a business administration degree and are essential for taking over a family business. There is a wide range of private and public universities, colleges, and universities of applied sciences that focus on the topic of “managing a family business.” Each institution takes a slightly different approach.
Different Areas of Emphasis
Figures from the Institute for SME Research in Bonn show that this is by no means a niche topic: according to these figures, 95 percent of all 3.74 million German companies are family businesses (as of 2006). For approximately 135,000 of these, a successor will be sought between 2014 and 2018. In half of these cases, a successor is found within the family. In about one in three cases, business owners appoint external successors who do not come from within their own company. In every case, the tasks are diverse and new to the aspiring entrepreneur. That’s where comprehensive preparation pays off.
Professor Birgit Felden, director of the bachelor’s program in Business Start-ups and Succession at the Berlin School of Economics and Law: “The program teaches how a business takeover can be financed, what is important when structuring the succession process, and which tools can be used to successfully manage small and medium-sized enterprises.” Unlike other institutions, this public university charges only about 100 euros in tuition fees.
The private University of Witten/Herdecke, home to the Witten Institute for Family Business (WIFU), also offers a combination of business administration, psychology, sociology, and law through its Master’s in Family Business Management. The institute’s Academic Director, Professor Arist von Schlippe, says: “Our goal is to bring together the most important disciplinary perspectives to adequately examine family businesses.” The institute has been conducting research and teaching on this subject area for more than 15 years.
Multidimensional Changes
The various aspects of business succession require an interdisciplinary approach, says von Schlippe: “Succession always involves the transfer of leadership responsibility. At the same time, however, aspects of corporate law and estate tax must be taken into account. Furthermore, the structure of decision-making and power within the family changes. Such multidimensional change must be explored from various perspectives.” This includes, not least, the psychological perspective, which is von Schlippe’s field of expertise.
Practical relevance plays a major role in all degree programs that focus on family businesses in their research and teaching. In Witten, for example, the so-called “matchmaking event” takes place twice a year—a networking forum for interested family businesses and students. Von Schlippe: “There, internships, projects, and thesis opportunities during the course of study—or entry-level job opportunities upon graduation—are arranged.” At the EMF Institute in Berlin, interaction between students and family businesses is also a top priority. The events are called “Today’s Founders Meet Tomorrow’s Founders,” “EMF Forum,” or “EMF Meal.” The goal is to foster lasting connections in which experts continue to support students later on as coaches or mentors, ensuring a smooth transition from college to the working world.
Factual Knowledge and Personal Interaction
Universities of applied sciences traditionally place a strong emphasis on practical application, as is the case at the FHM in Bielefeld, where the content of the individual course modules is taught through case studies. Professor Bernd Seel, an expert in business succession, explains: “Every degree program also includes a mandatory six-month internship that culminates in an internship report and an oral exam. This phase ensures the transfer of both knowledge and professional connections between the FHM and the business world.” Wolfgang Krüger, who heads the FHM’s Hanover campus, says: “After all, about 20 to 30 percent of our students are in a situation where they will take over a business, which is why the topic of business succession is an integral part of the program.” Although the FHM explicitly targets successors in their own family businesses, “we nevertheless refrain from including the term ‘business succession’ in the program’s title,” says Krüger. The reason: Many family-owned businesses are reluctant to let their sons and daughters pursue higher education because they fear that all trade secrets will be disclosed at the university. Krüger sees a unique selling point above all in the “harmonious combination of factual knowledge and a personal approach.”
A Wise Investment
Krüger disputes the notion that demand for such degree programs is rising simply because of the large number of companies that will need to arrange succession in the coming years. “In small businesses such as craft workshops, the sons and daughters who are set to take over often don’t prepare for their new role at all,” says the professor of family businesses, “it either works out or it doesn’t.” Succession in most medium-sized companies is organized in a similarly “organic” manner. The successor may have been familiar with the business since childhood and must now find their footing in a new role. In larger companies, new leaders often bring in external consultants to guide them as they take the helm. A degree program, on the other hand—whether at a university of applied sciences or a traditional university—offers alternatives. Felden, program director at the HWR Berlin, says: “Thanks to the focus on decision-making skills, process-oriented work, and networking, graduates also have opportunities for exciting careers in other fields—such as in management roles at small and medium-sized enterprises or in management consulting.” That is, if they know whether they have what it takes to be a leader.
