Rarely do family-owned businesses survive in the hands of successors. Family Business Institute reports that only 30 percent of these businesses survive to have a second generation of leadership.
The causes of family-owned business failure are many. The most common being the successors’ failure to update its model to be in line with the technological and industry trends.
Some failures also result from family wrangles in a case where some members of the family are resistant to change.
The following points will help you family-owned business to survive this kind of transition:
When you are taking over the family business, re-evaluate the company’s products and services; determine how the company needs to change so as to remain relevant. Consider pivoting its model to adapt to the changing technological and financial landscape.
Study and understand the current industry trends, and anticipate the future of the business beyond the state at which you are taking it over.
If you stick to the old ways of doing things, the company may be overtaken by the current technological developments.
For example, if the company was running on Windows-based tools, you may consider transitioning to web-based software that is cheaper and more efficient.
Also, today many customers use their smartphones to make purchases. You should therefore think in terms of moving towards web-based platforms to offer your products and services. Consider launching an ecommerce site or a mobile app to meet the ever-changing expectations of the customers.
Your marketing strategy should also include online-based tools like the social media and landing pages. This will ensure that you are at per or even ahead of your competitors.
In using these technologies, look beyond fads; don’t jump on trends that are only short-lived as this will prove costly to your business, instead turn to ones that are long-lasting or ones that can be upgraded.
You may also consider changing the company in phases. This is important in that, apart from giving the employees time to understand how to use the new technology, it will also give you an opportunity to gauge whether the new technology is actually suitable for your business. Changing the whole company at once may prove disastrous in most cases.
Stick to core strengths of the original business
You will be taking over a company that is already establish and has its core values. The customers will still be expecting the core message and offerings. Changing these abruptly may make the company lose its loyal customers.
For the company to survive the generational transition, you need to evolve and improve over time, giving the customers opportunity to change gradually with you. You can only retain the customers if you offer an improved version of the products and services or if you make your services more efficient. Changing from the core values of the original business may not be healthy for your business.
Planning is necessary to ensure that the company can finance all the changes. You may involve yourself in so many changes that may prove too expensive to implement, and if you go ahead and implement them, the company will collapse.
Have both short-term and long-term plans and ensure that they fall within what the company finances can support.