Statistically, most family businesses will fail before the third generation gets a chance to take the helm. And, only a few will survive through the third generation. The main reasons for that include family conflict and unprepared heirs; both of which can be mitigated. Intentional planning such that siblings, cousins and married-ins of gen three can see themselves as an interdependent unit with a common goal. Creating and developing that kind of culture is the job of the prior generation’s family business leadership and is quite possibly, their biggest one.
When it comes to preparing next gen leaders, the transition from first generation to second often happens quite naturally. Gen-two has usually had the experience of growing up alongside the family business. Summertime was spent working for Mom or Dad. Many hours of business phone calls were witnessed and dinner table conversations on work-related events. The organic training is often enough introduction to prepare gen two-ers for their family business career path.
“Why do you see it that way? What makes you believe that is a better option than this one? Where does this idea stem from? Have you tried this before? How did that go?” All good questions that will uncover more depth. This mode of discovery allows both the speaker and the listener to probe deeper and reveal new answers.
However, when it comes to preparing the third generation, their connection with the business is generally more distant. Because grandchildren did not grow up with the first generation’s business, they didn’t experience its humble origin or learn the family business values along the way. It will require an intentional plan to engage them and cultivate this set of future business leaders. For the best chance of continuity, it’s a good idea to start early and the approach should address these four areas.
Gen three are the founder’s grandchildren. Age differentials, geography, upbringing, and geographical distance separates them from one another. Yet, they will be called on to work as a team. And, the greater the number involved, the more critical their ability to collaborate. One approach is to provide opportunities for them to work together on projects or take responsibility for family gatherings. When the rising generation can practice working through challenges, failures and successes together, they can learn the value of uniting efforts, working as a team that is more prepared to lead when bigger responsibilities arise. A generation that has trained together, before the stakes are high is better positioned for successful continuity.
Take the time and opportunity to structure a curriculum around the family business, create required education classes. Be sure to include information that explains the key factors of success as well as the business threats. Generation three needs to learn the business model, how the business is structured and what key documents govern the business. The goal is to create clarity for greater understanding. Keep in mind that transparency is important, withholding information breeds mistrust.
What family history should the rising generation know? Who was the original founder and what is important to know about their life? By providing context and story around the people who built the business, the hard work, the wins, the challenges, and the dream, the story becomes relatable. Helping a young person see themselves as part of a bigger system can be a source of meaning and purpose. Family legacy is not just looking back; it includes looking forward. It’s the perfect opportunity to articulate the family values that are foundational to the family business.
Despite the popular notion, most good leaders are developed, not naturally born. Provide support for the rising generation to practice leadership and collaboration within their peer group and community outside of the family. Invest in, and at the same time provide tools for successful interactions and decision making. Leadership development focused on the skills and qualities of leadership will serve both in the family business and in their family life.
I Help Families Prepare Their Rising Gen Leaders
Family business wealth built over a lifetime can easily slip away. To increase the odds of longevity, prepare the next generation for its success. After all, the grandchildren hold the future in their hands. No estate plan or overarching family governance structure can supersede the value of a family who can work well together. The future lies in the hands of the grandchildren. As they approach adulthood, it’s time to start preparing them for their roles as owners, heirs, and team mates. I offer customized programs built on proven methods to build trust and shared purpose; the basis for successful ongoing interdependence.
My legacy family coaching programs can help you and your family:
- Design a family business curriculum
- Help you tell your origin story
- Define your families values, vision and mission statements
- Grow through leadership development
- Work better together
- Develop your family business succession plan
For more information on how my legacy family coaching programs can help you and your family preserve your family business through the generations, contact me for a free consultation: