In business, we typically think of growth in terms of sales and profit. As the business ages, we try to grow sales and to earn more profit. But in a family business, we must also strive to grow the business to provide opportunity for the next generation of family members.
Do you ever consider what business opportunities you should seek to secure to open the door for the next generation to enter the family business?
In a traditional family business sense, what was passed on in the family was ‘the business’. And the next generation was expected to accept this baton and to continue that same family business. This tradition may seem a bit antiquated in today’s world, but global succession research reflects, that some 60% of business families expect this tradition to be followed.
And there is merit in this view as it is often much simpler to continue and build a business from one that exists rather than starting afresh.
Of course, one of the challenges is the capacity of that business to provide for the growing family financially. A growing family requires a growing business to provide for its needs, especially if the same level of ‘wealth’ is sought from one generation to the growing families in the next generation.
Again, research reflects that of the five top barriers that families face in achieving succession, four relate to the financial capacity of the business to support the various generations of the family.
As a family business leader, your task becomes one of not just making the existing business profitable so that it can provide for the growing number of ‘mouths to feed’, but to multiply the business out. Multiply by expanding its base so that it allows for a boarder and stronger foundation for the multiple families which may come to depend on it.
Your eye must not be just to the core business but to other businesses, related and unrelated, where it makes ‘business-sense’ to take an interest in these businesses, active or passive.
You will not know where talent and interest will necessarily lie in the future family members, but a spread of profitable businesses which provide employment opportunity and a growing wealth is a solid strategy; for family unity and a compounding wealth across generations.
This strategy requires that you step away from just running today’s business and begin to build the family businesses for tomorrow as well.