Many of the most enduring businesses, especially in the small and medium-sized enterprise (SME) sector, are family businesses that grew and thrived thanks to the hard work and tremendous sacrifices of their founders. The resilience of a family business can often be attributed to the family’s commitment to high-quality products and services, as well as their dedication to caring for their employees.
While the family business setup features a lot of advantages that allow comprising businesses to build unique legacies, these businesses also have their own sets of challenges to weather. One of the most pressing is the issue of handing over the business reins to the next generation.
If you want your own small family business to operate for many years to come, it’s essential for you to equip your successors with all the necessary entrepreneurial skills early on. They’ll need to learn time-tested principles, like sound financial management for a business banking loan, and more contemporary skills like being tech-savvy in their business management approach. This will ensure that they have the ability not only to maintain the business but also to grow it beyond its current scope.
Here are five entrepreneurial skills that you’ll want to pass on to the next generation for a smooth transition of power:
1) Leadership Skills
Effective leadership is non-negotiable when it comes to successfully managing a family business. Successors should learn to make decisions with confidence, inspire those around them, and take responsibility for the business’s overall direction.
The older generation of the business should be able to impart visionary leadership, a commitment to innovation, and an aptitude for strategic decision-making to the younger generation. Despite the many changes that a family business can expect to endure, it should rely on good leadership as its consistent core.
2) Communication Skills
Effective communication is the glue that will hold a family business together, and an open communication approach is vital when it comes to fostering a healthy work environment within a family business. Successors should be adept at articulating ideas, actively listening to others, and maintaining clear communication lines with family members and other stakeholders.
Anyone who will steer the business into a new era must also know how to communicate with others involved in the industry, like longtime suppliers or new investors. As someone from the old generation, be quick to teach any of your successors how to communicate, who to reach out to, how frequently to reach out, and what outcomes to strive for in each interaction.
3) Financial Literacy and Financial Management Skills
Potential successors must also be highly knowledgeable when it comes to matters of financial literacy and financial management. Astute financial management, which should focus on long-term sustainability and prudent investment strategies, will contribute to the family company’s overall financial discipline and prepare it to weather tough times.
One pertinent example for how you can impart good financial literacy and financial management skills to your successors is to involve them in the family business’s debt management. You can look for loans for businesses together and teach them to be responsible for amortizing the business loan in a timely manner. Family businesses in the Philippines can check out Maya Business’s Maya Flexi Loan for the most favorable terms and a means to manage loan repayment without stress.
4) Adaptability Skills
In a world where change is rapid and constant, adaptability is a family business’s best defense and offense. Successors should be prepared to embrace new technologies, stay abreast of industry trends, and adapt to shifts in the market. This is what will help them keep the family business relevant and competitive against newer, fresher players.
Educate your successors about the benefits of innovating the business when it’s ready, such as by diversifying interests or shifting to a more tech-oriented or data-driven approach. Both moves will take time and may initially seem risky, but your successors are in the best position to practice adaptability and guide the rest of the business through such big transitions.
5) Negotiation Skills
Negotiation skills will always be paramount in business dealings. Whether with clients, suppliers, or other stakeholders, your successors should be adept at finding common ground and creating mutually beneficial agreements for everyone.
In your previous experiences, you may have already learned the value of negotiation and making strategic deals and alliances. Find a way to compile the knowledge that you’ve amassed over the years and pass it on to your successors, all while encouraging them to develop their own negotiation styles and broaden their own professional networks.
Whether your family business is a conglomerate or a simple mom-and-pop store looking to expand its operations, passing the baton to your successor will never be a straightforward task. It requires a deliberate effort to impart crucial entrepreneurial skills long before the time comes to hand over the reins. Nurture these skills early, and you’ll be able to pave the way for a business legacy that will flourish in the far future.