CALL US AT 913.374.0319 (Kansas City) or 402.982.4567 (Omaha)

A family business can be a source of pride, dreams, and financial success. Keeping the company within the family is strategic, but it can become problematic if the next generation is not ready to take the reins. It takes time, dedication, and integrity from both sides to properly bring older and newer generations together in the family business. So, as your family business grows, consider these five ways to prepare the next generation to take over. 

Provide Shadowing and Development Opportunities

Exposing the younger generation to the business early can get them excited and motivated. A shadowing program can start as early as your child can walk. Bring them in to play in the office, have a picnic in the meeting room, or show them how the printer works. These little interactions can positively impact how they view the business later on. Additionally, if you have a high school or college student in your family, a shadowing opportunity can be great for them to build up their skills in the workforce and start in the family business on the ground floor. 

Development opportunities can be a great way to move your younger generations through the family business while educating them on multiple aspects of the company and allowing them to find what really interests them and help them grow in that area. They can gain experience while learning general management skills and other departments’ skills. You want to show them that they are welcomed into the family business and that there are opportunities for growth and success for them there. 

Build Context For the Business’s Goals and Vision 

One way to really get the next generation excited about the family business is by appropriately showcasing the company’s goals and vision. If they can see how the business positively impacts the community or how your product/service helps those it is used by, you can show the value of the business. You can talk about the business’s history, how it started, and how far it has come. This can spark inspiration in the next generation to continue on the legacy and grow it to be even larger. By explaining goals, you can have a future-oriented conversation with the next generation, including them in that future. 

Define Roles and Provide Education

Everyone will have different interests that may or may not fit into the family business. The last thing you want is to force someone into a role they are not interested in. This is where communication becomes essential. Sales, finance, HR, or project management can all be great roles for the new generation if they are not excited about more managerial titles. Depending on where they might fit best, the right course of action is to provide education in that department and help them feel motivated and excited about their role.

Additionally, the family outside of the business still plays a significant role. They can be a great sounding board for decisions and collaborative efforts when necessary. So, even if someone doesn’t see themselves in the business itself, they can still contribute to the larger picture. 

Teach Financials and Business Essentials 

Basic financial knowledge is essential when passing the business down to the next generation. Family members must understand the business’s financial history, health, and potential. This can ensure they make sound decisions on compensation, inventory, valuations, and more. Additionally, business essentials are, well, essential. Providing opportunities such as seminars, business classes, or coaching to those who wish to take over in the coming years can be extremely beneficial. Education is a critical foundation for success when you pass down the family business. 

Be Open and Honest About The Business 

Lastly, the most important part about passing on the family business to the next generation is being open and honest about everything involved in the company. Discussions about finances, processes, and recent failures can be awkward, but they are essential. You want to set up the future generation for success, and you can’t do that if they don’t know the whole picture or have false information. If last year’s profit was down from the year before, don’t be afraid to explain that and go into why and how you are working to fix it. They might even have some ideas of their own on what to do. Honesty is truly the best policy, especially when working in a family business. 
Preparing the next generation to take on the family business is not an easy task. It takes years of preparation to execute properly. If you are facing this new stage, don’t go at it alone. Contact the team at ReVera Capital.