These Tips Will Help Entrepreneurs Prepare the Next Generation for Family Business
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It has been seen that leaders of age-old businesses who are strategic and work closely with the next generation have better chances to pass the baton of their businesses with self-reliance.
According to the recent PwC India Family Business Survey, 75% of Indian family businesses have grown in the last 12 months and 84% are expected to grow over the next 5 years. Today, 78% of family businesses in India have next-gen family members working in the business. Further, 73% of the next generations working for the business are in senior executive roles. Armed with individual ideas and expectations, these next-gen leaders are open to diversification, digital and technology. They are also keen to leave their mark on the family business. However, the journey is not always smooth.
In most of the family businesses all over the world, an advisory board is bestowed with the primary task for succession (44%), followed by the family council (23%) and the CEO (22%). Experts say businesses houses that work as a team and focus on getting the next generation ready actually facilitates transparency in the business and augment success.
Here are the things business leaders in multi-generation family businesses should consider while preparing the scions-
Start Your Succession Plan Today
It has been found that in spite of the common accord that succession is a high-priority affair; many family businesses are not prepared with a comprehensive plan. According to Shankar Mondol, founder Deep Publication - a 40-year-old publishing house, it is critical to effectively categorize generation change in your organisation. “You must mull over the realistic, objective, technical and emotional aspects involved in the change process. Though financial and legal aspects of your succession are very important, it is pragmatic to take a step back and think about the personal goals and values of your business. Resolve the existing emotional concerns that have the potential to impact the next generation,” he elaborated. Diptangshu, son of Shankar is now heading the business.
Getting ready for your succession plan early on helps the next generation have abundant time to learn and amend the basic rules of the business.
Take an Honest Look at Who Can Lead the Business
Existing business leaders must understand that family members may not have the aspiration or the abilities essential for taking up a leadership role. If it is found that the business cannot be handed over to a family member, look at other options for leadership roles. You can explore the family circle, amongst the working managers, board members, or even potential external aspirants.
Shankar feels, “The ultimate ambition is not to make the succession plan come as a shocker to the family, and that the business growth isn’t compromised by the change of guard.”
Growing up in Business Family Provides Opportunities to Learn
Things one is exposed to during the formative years play an important role in career choices. If business is the recurrent topic of dinnertime conversation, then the seed of entrepreneurship gets sowed very early and effectively. And the entrepreneurial focus of upbringing in business families normally has a lasting impact on the children.
Growing up in a business family is a big advantage as it gives the next generation opportunities to learn things while growing up. “Growing up in a business ambience has helped my son gain precious real-world business understanding. He got the guidance and support of all the seniors in the family who helped him learn about learning about business ownership, advisory boards, governance and basic accounting,” shared Darshan Shah, Founder, Weavers Studio, a 2,000 sq. ft studio, which distributes textiles in India and abroad and has an annual revenue of INR 9 crore.
Enable Formal and Informal Learning Opportunities
A well-rounded edification is an absolute necessity for the Gen X business leaders. Senior leaders in family businesses should help their children develop an international outlook, and enrol for vigorous training programs intended for new-age leaders in order to prepare them for future interactions.
“Equally vital is providing them with opportunities to learn beyond the classroom,” says Shah. “Exposing them to important business contacts through informal meetings, company emails, and family as well as company histories is a wonderful approach to initiate the young ones into the business environ. Also, make them learn about the domain through trade events and pertinent publications and have them stay informed about the topics and trends in the industry. This will endow with a solid grounding and is also a great way to build their network,” she added.
Darshan’s daughter, Radhika Shah Bheda has been initiated into business five years back and is now the director of Weavers Studio.
Embrace an Innovative and Entrepreneurial Spirit
Businesses that have been successful for generations have embraced entrepreneurial spirits. While preparing the next-gen, be ready to value the new ideas and perspectives that they will bring in to the business.
“The new conceptions may be different from what you’ve established, yet they should be recognised and appreciated in order to move ahead. Approval of modernism and building an innovative milieu will show your recognition of change and permit originality to thrive in the company,” counselled Atanu Dutta, the fourth generation, entrepreneur and Director, Cookme (Spice) Private Limited, founded in 1958.
Today, Atanu’s Son Subhamoy and daughter in law Stuti both CS have joined the family business and are bringing in new ideas to it.
Leadership change in a family business is acknowledged to be an extremely intricate procedure and often becomes a balancing act. Business barons who take succession planning as a journey rather than a target always succeeds in helping the successors get ready for the next exhilarating chapter of the family business.