5 common mistakes when delivering an article to a family business
Up to 40% of companies in the Czech Republic can be described as family businesses. However, not one in three will survive more than one generation. Only every family business in the twenties can successfully implement the second generation of change. In practice, we may encounter several fundamental errors that can complicate the company’s handover process and provide owners with many sleepless nights at best. What are these mistakes and how do we avoid them?
The key is really honestly planning the entire delivery process. However, planning should not begin until the handover is complete. “Subtract five years from the planned handover date, after which you should start preparing for the company’s handover. Educate your successor carefully,” notes Jerry Gemilka, CEO of JIP Business Consulting with a focus on revitalizing small and medium-sized enterprises. Generational change is a long-term distance. It often lasts for several months, often several years.
Underestimating a choice of successor or sympathy is not enough
Who would you choose as your successor? The selection of the right candidate is closely related to the right timing. If you have enough time, you have a better chance of choosing the right person and at the same time raising your successor, so to speak. Two-thirds of family business representatives state that the company’s goal is for a family member to take over the business. However, for a handy person from the family, always try to assess objectively whether the person in question will not only be able to take over the company, but also be beneficial for its further development. Only sympathy should not make a choice. There may also be situations where you do not find a suitable candidate in your family. Then you will have to come up with an alternative solution and look for a new department among the employees, completely outside the company, or sell the company.
You will never go into a river twice
It is also important to clarify your role after the company is handed over. You can retire or win a stake in the management of the company as a member of the supervisory board or the chairman of the board of directors. “In any case, once you leave the company, you don’t return to work. Trust the new leadership, trust your decision. Check remotely, strategically, with a time period of one month or a quarter of a year. Always inform your successor of any complaints and advice between your eyes,” advises Jiří Jemelka. Only fresh blood can propel the company forward.
The delivery process is not continuously evaluated
You have a candidate selected and the exchange process has begun. The next vital step is scheduling the pace at which you will move to the goal and assessing individual progress. That is, whether everyone moves to the right positions on the right terms. So, set specific deadlines with specific interim goals. An example is the complete takeover of communication with key customers by your successor within two years of commencing delivery.
Lack of communication with employees and clients
Never underestimate the importance of communicating with your employees. If you keep it a secret for too long, employees will definitely feel the changes coming and may feel threatened. Potential stress in the company and working in fear for their jobs or salaries can have a negative impact on their behavior or approach to work. Equally important is communication with clients. Early identification of customers with the new management will enhance business relationships and boost trust in your brand.
Extra tip: Get advice
Family business development in the Czech Republic was suspended during the period of socialism. However, a number of family businesses operate here. However, many founders happen to be when they have to decide who to hand over their hard-earned business at the end of their careers. In countries where the family business is fully developed, it is very common for companies to employ private consulting firms that provide advice on succession and corporate transfer in generational change. So don’t be shy to turn to the experts. As a rule, everyone deals with handover of the company only once in a lifetime. Thus, the advice and expertise of experts in this field can go further than gold, as it will facilitate the whole process and increase the chance of the company continuing in its business successfully even after the change.