Family business owners face challenges that make most people cringe. The mixture of family and business creates the need for a special kind of balancing act. Can you imagine having to make a high stakes business decision, and then turn around and have a family holiday party? This is only the start of how difficult it is to be part of a family-owned business.
Now take it a step further--you are a member of the so-called “next generation” of the family. To me, this name is demeaning. I prefer to call this group the rising generation. The word next insinuates next-in-line. While the word rising points toward the future opportunities of this generation.
I have witnessed all of this firsthand. My grandfather, George Menke, Sr., started Pryde Signs in Sioux Falls, SD with his brother-in-law in 1947. In 1949, he became the sole owner and changed the name to Pride Neon Signs. I’m not involved in the family business, but my brothers and cousins are now taking the company into the third generation. They are the rising generation and have challenges ahead to continue the legacy.
In a 2017 study conducted by PwC, the members of the rising generation were placed into four categories. These categories describe the various ways this generation may take their family business next. Stagnation is not an option. The rising generation must take the reigns of the family business to ensure success both today and in the future.
This is the most common role you may take in your family business. Your main priority is to continue the legacy that is in place and pass it along to the generation that follows you. You want to grow the business and leave it as good or better than when you entered.
The most difficult aspect of being a great steward is balancing the family business goals with your personal goals. This takes an intentional effort from a well-educated and emotionally disciplined individual.
You are an intrapreneur if you are able to take on a new venture within the confines of the family business. This can either be necessary for business reasons or due to frustrations with the current system. Opportunities like this don’t come often, but can be a great way to take calculated risks.
The new venture should be a business in line with the existing business, to have the greatest chance of success. Your family has built business relationships and a community reputation over the years. Try to build upon the family legacy.
Much like stewards, transformers are primarily focused on the longevity of the family’s core business. You are also tasked with making substantial changes within the firm. Change and innovation is necessary for even the most basic of businesses. It will take courage from the rising generation to take the business to the next level.
A great way for family businesses to embrace transformers is a requirement to work outside the business for a set period of time. This time period of at least a few years allows you to develop skills on your own and bring them back to the company. The cutting-edge experience earned at other companies will grant you the trust you need from the current generation to succeed going forward.
When a family business is too crowded or not the right fit for a rising generation member, you may turn to entrepreneurship. This will be entirely separate from the current family business. The drive is in you from generations past to create something new and innovative. Attributes required for successful entrepreneurship are confidence and energy. It will take a special effort to go off on your own.
Funding for the new venture will most likely come from outside the family, since it is an unrelated business. While many businesses take significant capital to start, today’s technological advancements make bootstrapping a business with little to no money more than possible.