It is crucial to involve the next generation early in the process of transferring a family business. By communicating openly with younger family members from a young age about the business, its values, and future plans, current owners can help foster a sense of pride, responsibility, and buy-in. However, it is also important to consider each individual’s skills, interests, and vision for their role. Not all next-gen members may be suited for or attracted to leadership, so exploring alternative paths for meaningful involvement and ensuring fair treatment of all can help avoid resentment.
Owners may struggle with relinquishing control to younger generations taking over day-to-day operations. Part of this stems from uncertainty about their own identity and purpose post-exit. Advisors can help families establish governance structures like family councils and constitutions to facilitate transparency and partnership between generations. Educating next gen on the financial and psychological aspects of transition also fosters understanding of different perspectives.
Strong communication and fairness are key to maintaining unity through change. Next gen should have a voice in planning to feel heard and respected as partners rather than subordinates. Clarifying expectations around issues like compensation can prevent unmet assumptions from breeding conflict down the line. With early, ongoing engagement of all family members and a shared commitment to legacy, advisors can help business-owning families build continuity across generations.
If you are looking to transfer your family business to the next generation, contact our business succession planning team today to start planning for a smooth transition.