A family business has specific decisions to make about succession:
Is there someone in the family capable of taking over the business?
If yes, do they want to and are they capable?
If no, what are the other options?
Selling the business is an option. Hiring an outsider to run the business is the other option. This might be the permanent solution until such time that the owners decide to sell, or it can be an interim solution until such time that a family member is ready to take over.
A business is grown, typically, by someone(s) with enormous courage, energy and passion. The stress they endure in the early years is significant. As the business grows and settles, the owner(s) hire people to support the growth and operations. At some point, the owner considers the succession options.
In some cases, the next generation is interested in the business; they will be educated accordingly, go in to the business and it will continue to thrive. In other cases, the next generation, while possibly interested in the business and having some energy to reasonably sustain it, might not have the same passion, despite being able to keep it (reasonably) afloat.
In yet another case, the next generation is simply not capable of taking over and it is obvious to anyone who is looking at the matter objectively. Some business owners know it and plan accordingly. Others know it but don’t want to have to deal with the reality, and ignore it (common!). And others probably don’t see it at all, although I sense this is the least likely circumstance.
There are many senior business executives – who have seen great success – who could step in to a family-run business in the event the next generation is not yet ready or might never be ready. Family businesses should do what is best for the business given the business supports their family. Doing what is (perceived to be) best for the family may be at the expense of the business which may bring serious consequences to the family – both financially and potentially, unnecessary family conflict.
While it is certainly difficult, this is a great example of what I like to call “lose the emotion and stick to the facts”. Emotionally, it might be best to hand the business off to the next generation. If the fact is that this might harm or even kill the business, this is a huge risk and one not worth taking.
Do you have a family business and if so, what are your plans?