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Transitioning a family business to the next generation is more than just turning over financial and operational control—it represents the continuity of a family’s commitment and purpose and requires thoughtful planning. Family relationships, especially intergenerational ones, can be challenging in ordinary circumstances, but even more so under the stress of running a business.

The keys to untangling family and business relationships are planning and communication—planning for the short and long term and communicating the details of those plans with the appropriate family members. Working with a team of professionals who understand the complexities of family business ownership can help to promote these important aspects.

Accepting Generational Differences

Different generations often have competing priorities and ideas about the business. If you’re considering transitioning your business, it’s important to support the next generation by fostering a culture of ownership and allowing them to fail and learn from mistakes. Empowering successors to make crucial decisions will allow them to run the business with confidence and fully invest in its long-term success. Welcoming new ideas engages the next generation and encourages them to challenge existing paradigms. At the same time, letting successors understand how a business works through hands-on experience gives them a chance to appreciate why certain things are the way they are. It is this balance of empowerment and guidance that will help them be effective leaders.

Working Together as a Family

Together, successors and founders can chart a sustainable course for the future of the business that builds on its best attributes, strengthens its existing culture, and incorporates your core values. Management and leadership will likely be instrumental in the delivery and implementation of any successor preparation program, mentorship, or on-the-job education to prepare your successor for the scope of their responsibility.

Family businesses are complex organizations that present unique interpersonal challenges but also have an extraordinary capacity for longevity. When a family commits to a business, their responsibilities both to each other and to the business’s wellbeing can deepen their bond and create a wholly unique, close-knit company culture. Intentionally establishing a culture that is welcoming, agile, and open to change, and building family relationships that prize direct communication, stewardship, and community, are the building blocks of a strong business that can support a family well beyond the founding generation.

Benefit of Partnering with Professionals

All business owners will eventually transfer ownership. A succession plan reduces the inherent risks of ownership transfers by providing appropriate support to new leaders and preserving your business culture and core values. Glenmede’s Business Owner Advisory Services can offer insight into governance, succession, and transfer planning, while considering your personal planning objectives. Our specialists can help you design a succession plan that clearly defines processes, provides for contingencies, and sets the stage for the successful outcome you envision.

For more information about how Glenmede can help with transitioning your family business, contact Adam Douberly, Northern New Jersey Regional Director, at [email protected] or 215.419-6007.

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