Succession planning in a family-owned business involves a change of ownership and control of a business enterprise from one generation to another within one bloodline. Businesses are often faced with several challenges due to personal internal and external factors. In some cases, the ownership transition occurs smoothly; in others, external bodies such as concerned government bodies have to intervene and help the predecessor and the successor to have a swift decision-making process and implementation of other logistics. In most cases, there is fear from the predecessor that the successor may need to be more skilled to maintain and control the business. There is a need to have an early preparation of the succession plan, having outlined all the legal requirements that the successor, predecessor, and the business itself should put in place to enhance a smooth transition.
Succession planning often faces shortcomings such as unpreparedness, pre-existing family conflicts, emotional attachments, external pressures, and unfairness and inequality during the transition process (Brito, 2022). Addressing these challenges is not just a mere process of who should take control of the business but who will achieve a lifetime legacy regarding the business’s success. Besides the business’s future success, the continuity of the underlying culture is another factor that requires much attention from the predecessor. In other words, the successor must be ready to preserve and ensure the continuity of the business traditions, norms as well as entrepreneurial features.
Wrangles between family members set to inherit the control and management of the business often appear as an obstacle during succession planning. Such disputes can heighten during the transition process, compromising the business’s operation and the relationship between family members set to control the business. Family conflicts can also jeopardize a business enterprise due to differences in management styles and the objectives that one may have for the business. Therefore, it is necessary to resolve the disputes before the succession process.
Succession planning requires quality time and resources, such as legal requirements. Lack of preparedness by the preceding generation may compromise the leadership of the business. Enough time allows the next generation to gather the necessary resources, gain skills, and understand the business’s nature and tradition to be inherited (Brito, 2022). By so doing, it becomes easier to facilitate the ownership and management transition process.
On the other hand, external factors such as legislative changes and market dynamics can hinder succession planning. They create pressure, which may build fear in the predecessor generation, delaying the succession process. The complexity of such factors predicts the future state of the business complex, hence delaying the process.
Lastly, in some cases, family members get emotionally attached to family-owned businesses, making it difficult to let go to another generation. The emotional ties may hinder succession even if it is meant for the prosperity of the business (Adams, 2022). Such cases often lead to fragmentation of the business, which is usually contentious. Division of ownership and business assets may be fueled by unfairness, thus leading to disputes in both the business and the family.
In conclusion, understanding the problems encountered in the succession process of a family-owned business helps set top-notch strategies that smoothen the transition process. Implementing thoughtful strategies into a family-owned business paves the way for a smooth journey for the continuity of the business and easy navigation through entrepreneurial challenges. The successor of the business is solely responsible for embracing positive values and energy toward the enterprise’s well-being while holding up to the business’s pre-existing values, norms, and traditions. By maintaining the culture of the business, the successor, with a higher-level resilience and enduring spirit, is likely to achieve a thriving legacy that they can equally pass over to other coming generations.
References
Adams, S. (2022). What psychological challenges affect small and family business succession? Succession Planning for Small and Family Businesses, pp. 103–114. https://doi.org/10.4324/9781003281054-8
Brito, J. T. (2022). Family-owned business dynamics and politics. Succession Planning for Small and Family Businesses, pp. 77–102. https://doi.org/10.4324/9781003281054-7
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