A family business that makes it to the second generation has beaten the odds. As Entrepreneur reports, only 30 percent of family-owned businesses are successful long enough to be passed down to the next generation.
In order to overcome this hurdle, the founding generation must possess a willingness to give up control as well as the ability to balance old traditions with new ideas. A successful next-generation family business takes the best traditions and lessons learned and adapts them to changing demands and market conditions.
Here are five tips for second-generation business owners to help their parents' business thrive under new ownership:
1. Avoid Making Any Radical Changes
Unless you inherit a struggling business, it's not a good idea to completely overhaul the company and change how it operates. After all, you want to do your best to retain and serve your loyal customers. As such, you should strive for evolution — not revolution — in order to keep longstanding customers happy and attract new ones, too.
2. Leverage Positive Qualities
Conduct some research to determine why repeat customers have chosen to form a long-term relationship with your company. Then, you can build on these strengths to help attract an even larger audience. You can use this information to enter new distribution channels, explore brand extensions or add new products and services to complement the qualities that loyal customers love about your business. Instead of moving in a totally new direction, you can build on your company's established track record and reputation.
3. Hold on to Your Long-Time Employees
It's likely that your workers and staff members have been the face of the company for years. As the business changes hands, it's important to make sure that these employees know that they will continue to play a critical role. By holding on to your best team members, you can get one step closer to ensuring that your business survives for generations to come.
4. Be Clear About the Company's Mission and Vision
Change is scary for everyone. One way to ease your team's fears concerning the transition is to emphasize the continued importance of the company's core principles and values. If the business you're inheriting needs to improve — or establish — its values, now is a great time to do so to show dedication and direction.
5. Explore New Technology
Some small businesses are up-to-speed with technology and the use of state-of-the-art equipment. Unfortunately, others have resisted technology adoption and are being left behind by the competition as a result. Next-generation family businesses have an opportunity to automate processes using modern technology, while also testing new online marketing tactics. By slowly replacing outdated technology with newer, more efficient equipment, you can benefit the business without plunging it into complete turmoil.
Next-generation family business owners have a tremendous opportunity to build on the success of their parents' generation. But they must be willing to focus on the company's present strengths and introduce incremental improvements, rather than undergo a massive renovation.
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