Standing the Test of Time: Part 3
Making the transition
In our first two articles about sustaining a multigenerational business, we examined the benefits and potential threats of running a family business (part 1) and the keys to business longevity (part 2). In this final article, we look at making effective leadership transitions at a family business.
No matter how dedicated management and employees are to a multigenerational business, the devil is in the details. Knowing the concrete facts that will assure continuity of service can make the difference in determining if a legacy business survives transitioning to new leadership.
“It is definitely realistic to believe an operation can endure for decades, but only if care is taken to communicate and execute,” explains Tim Vaux, a strategic planner for consulting firm FreshXperts. “Vision and mission must be shared by all stakeholders, and all operations must be aligned to achieve the desired future state.”
Maintaining Identity & Brand Strength
Operational considerations and brand-building are key elements in handing over a functional business to the next generation. Strengthening brand identity through innovation and added value is important, but there must be a strong identity to build on first. Knowing there are gaps in knowledge is as important as knowing strengths.
“A long-term survivor will have a business plan to guide a company over time and the ability to generate enough capital through sales and investment to generate repeat sales,” explains Fred Duckwall, president of a shipping business in Hood River, OR. “Never let short-term profit interfere with your long-term objectives. The quality of, and need for, the product will let the logo and label carry the message to the market for you.”
With legal, financial, and tax issues all needing to be dealt with at the time of succession, making sure the company has a strong reputation and robust systems in place can relieve a great deal of unnecessary pressure. In many cases, an outsider or consultant can lend a hand to ensure the transition goes smoothly.
When interviewing consultants or advisors, make sure they have a history of working with multigenerational businesses, as one size most definitely does not fit all. “This is where the outside legal and accounting professionals should come in,” explains Vaux, “but each business is different. Outsiders may be detached from the business, but they understand it, and can act independently and equitably.”
Ensuring Your Legacy
While family companies may have similar structures, product mixes, or approaches to business, there are always crucial differences. Nevertheless, some of the same words kept cropping up in conversations with people who work in or consult with multigenerational businesses. Values, culture, integrity, and dedication—these qualities of any successful enterprise are of particular note in a legacy company.
Continuing to innovate while respecting tradition in a way that reminds employees of the company culture every day, is what separates the good from the extraordinary.