I am part of a family-owned business that spans four generations. The business founders, now in their early 80s, built it up to be the thriving enterprise it is today.
Now they have handed the reins over to their children. This transition brings tremendous challenges; every generation has its own way of working. To do the books, for example, the founders would give the accountant bags of paper. In contrast, the new generation, which now is managing the company, sees the importance of putting it all online. They recognize that vital information simply can’t be paper-based, because it must be accessible in real time, all the time, for reporting and tax purposes.
Better organization (i.e., from paper to automated) and a strong foundation are vital for growth and for future generations to leverage. The future generation needs to learn business management skills, build on the established operational infrastructure, and ensure that they understand the many regulations related to their industry.
So how does one orchestrate all these generational needs effectively?
- Give everyone a vital role in the process. “When I quit working, I’m dead,” one of the founders said recently. He truly fears that without ability to add value (in his case, working hard), he is rendered useless. Don’t put anyone in this position. Give them a vital role in the success of the business. For this company president, it meant giving the founder oversight of all maintenance, which lifted a huge burden off his shoulders.
- Put one person in charge. While everyone can help, you need to have a primary decision-maker. This is key to avoid cross-generational conflict and “Medusa” management principles. The vendors, suppliers, and customers of the business need to know who this person is in order to facilitate consistent and clear communications. Imagine a crowd-sourced contract and the damage it could inflict. Having no single leader opens your business up to tremendous risk and costly mistakes.
- Leverage others in your industry for best practices. What worked yesterday won’t necessarily work today. One way to keep on top of new trends is to ensure that you are listening not only to family members and business founders, but also to others who walk in shoes that look like yours.
- Remember: It is business, not personal. This small company has had the same property manager for the past 12 years. He’s a wonderful person, but it’s a struggle to get him to embrace digital business practices that would expedite the handling and processing of vital documentation. In order to drive the business forward, the business leaders need to hire a new property manager, but the founders aren’t comfortable doing so because of the long-term relationship. Businesses need to recognize that sometimes moving forward sometimes requires introducing not only new methods, but also new resources.
- Share… but not everything. If you are mortgaging your home to pay for an unexpected business expense, you probably want to tell your spouse. On the flip side, unless you run a nursery, hiring a new gardener may not warrant a family meeting. Open sharing of the right information will ensure minimal conflict, and that those who need to be involved are involved at the right time.
Complex issues are cited as one of the top three reasons family businesses fail, so every business needs to ensure they stay on top of them. This means they need to use effective tools that are simple enough for the 80-year-old to grasp but that also scale for the future.
To succeed in a cross-generational business setting, every generation must be open to change. The founding generation needs to feel that they aren’t being pushed out and that their opinion is highly valued. The sandwich generation (which is often given the role of orchestrator) is stretched in all directions. They must not only deal with ever-changing tax and regulatory changes, but they also carry the weight of making decisions that will satisfy everyone. It’s a huge responsibility and undertaking. In addition to all the external pressures, they must serve as peacemakers across the generations to help the business thrive and grow.
“Do not underestimate the amount of effort, perseverance, and discipline that is required to be successful. I cannot stress that enough. There will be problems and you must be ready mentally, physically, and spiritually to deal with them…”
Want more smart strategies to grow your business? See Invaluable Advice from 18 of America’s Top Small-Business Owners.