What to Do When Family Doesn’t Want the Business

by Ramez Baassiri

When it comes to family business succession, the next generation often struggles to maintain the business’ success. In fact, the transfer from Generation One to Generation Two is usually about   Why? The reasons run the gamut from the next generation being ill-prepared to lead the company, to the business model becoming dated and no longer viable.

But what if the problem is that the next generation simply isn’t interested? Or what if there is no next generation?

In China, this is a problem for more than half of traditional private family businesses, according to Jean Lee, co-director of the Center for Family Heritage at China Europe International Business School.

“There are theories and (real) factors that limit the willingness of the second generation to get involved. First, it is about the tide of industry,” Lee told Forbes. “Most of these family businesses are rather traditional…Second, most went to college, and some of them went overseas and then came back …and want to set up their own company. Some of them will even choose to work for others.”

So, what’s the solution? In the end, you must let the members of the next generation make their own decisions. When there is support, love, and respect given to the next generation, there is a chance that those family members may eventually come back and take over the family business.

When Adopting New “Family Members” May Be a Necessity

If there’s no clear successor for a family business but the company wishes to continue on, or when a successor is struggling to run the business, it may be time to consider bringing in managers and leaders from outside of the family. Family members may still sit on various governing boards, but the running of the company may need to fall to a non-family CEO.

And though at first glance this may feel like giving away some of your power, it can also be an enormous burden off your back.

Take the example of Hartmut Jenner, a non-family member who serves as CEO of the cleaning technology company Karcher, which had been family owned since its founding in 1935.  Under Jenner’s leadership, the company has grown financially, and its products have evolved both visually and technologically. After fifteen years of working with the company, Jenner stated that he was starting to feel like one of the family. “Yes, the company becomes part of the family,” Jenner told Die Presse in 2014.

Remember, There Are Always Options

The fact is, not everyone in the family may be the best fit for the company, and even obvious successors may not be ready or right for the job. This is why transparency is key, so that leadership can be taken over by whoever is most capable, not necessarily the most traditional.

As a family business owner, apart from accepting that the next generation must make its own decision regarding the family business, or welcoming an external manager to run your family business, if you want your family business to stay in the family, there are effective solutions available.  Take the time and appropriate steps to nurture and prepare the up-and-coming generation so that they not only feel welcome but will also be aware of what “taking on the family business” will truly involve.

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