The numbers are simply staggering. There are about 75 million baby boomers in the United States, and according to a recent article in the Pennsylvania CPA Journal, baby boomers currently own approximately seven million American companies. The article also noted that around 10,000 Americans turn 65 every day. When you consider that many businesses are family-owned, and the success rate of family businesses surviving the second generation is 30 percent, it begs the question of whether your business is really G2 (second generation) ready.
Here are three techniques family-owned companies can use to complete a successful transition and increase the chance of survival into the next generation.
1. Leadership Labs
Many family businesses offer leadership labs geared toward the next generation. They are a great place to collaborate and share experiences and provide insight from peers in a similar position. Experienced facilitators provide feedback, point to common issues that arise in a transition, and share what works as well as what doesn’t work.
2. Well-Rounded Internal Experience
To provide greater insight into what it takes to run the business, it can be useful for the next generation to work in different roles or departments within the company. Consider that founders involve themselves with all aspects of a business, especially in the early years when they are just getting started and resources are scarce. While G2 may have the luxury of skipping this phase, they can also miss out on useful insights. For instance, on the successful television show Undercover Boss, you can see the powerful awareness CEOs obtain when they go “back to the trenches.”
3. Outside Work Experience
Family members with outside work experience often bring new ideas and ingenuity to the table. Many prudent businesses dictate outside work experience as part of a family employment policy. This practice helps ensure that new ideas are being presented to spark innovation, and that the company is hiring productive family members.
Succession of the business to the next generation presents its own set of challenges and is never easy. Explore one or more of these ideas to help to make your business G2 ready.