The riskiest time for a family business occurs during changes in ownership and leadership. With the great wealth transfer of family businesses now underway, next generation transitions will ramp up quickly. So much is at stake for the business families themselves, their local communities that rely on them and even our national economy. It’s vital that these transitions are successful.
Research that identifies a clear path to a smooth transition is valuable to business families, advisors to those families and the whole family enterprise ecosystem. That is what this research addresses, and it provides key insights on:
- What are the keys to maintaining family harmony and business longevity?
- What has worked well in their succession and transition planning journeys?
- What are the roadblocks and pitfalls to avoid along the way?
Our Foundation’s research provides the most comprehensive picture of transition intentions in Canadian business families to date. The third part of this national research, based on interviews with the next generation, is summarized in the latest Family Enterprise Foundation report, Preparing the Next Generation: A Family Business Roadmap, available in English and French.
Why research this?
When family business leaders consider their succession journey and the future of their business, often the focus is exclusively on finances and tangible assets. However, our previous research revealed that next generation preparedness is actually the biggest concern when considering intergenerational succession. So, while financial considerations should always remain a part of the larger picture, the future of a family’s legacy lies in its human capital and effectively preparing the next generation.
The Family Business Roadmap
In this research, in-depth interviews with next generation family business members identified five practical strategies in a roadmap to help both generations prepare for the transition process:
- Foster early involvement and emotional connectedness: Nurture strong emotional bonds to the family business through early exposure and involvement, which helps to measure and to build interest.
- Train and prepare: Create a comprehensive training and preparation program for the next generation. The program should feature both formal and informal learning structures and may involve experience gained outside the business.
- Encourage mentorship and peer interactions: Encourage peer interactions and mentorship to provide the next generation with a robust network to learn from and lean on throughout their career. Surprisingly, nearly all study participants received guidance from a mentor.
- Find the right role: Rotational programs are an effective way to help next gens find the right role in the business. However, most respondents believe the next generation should not be forced or expected to play a role in the business. They should only be involved if they are fully aware of the responsibilities of ownership and are passionate about the opportunity.
- Involve trusted advisors: External advisors are cited by participants as among the most desired and beneficial supports for family enterprises. Involve advisors who are specifically trained to work with business families to help maintain harmony by opening communication and improving transparency.
How to leverage this research
Family business leaders and Family Enterprise Advisors (FEAs) can implement the learnings and the practical roadmap from this research into their own family enterprises and practices by reading the full report: Read the report / Lire le rapport.