The transition of a family business from one generation to the next can be an emotionally trying time. To this end, the success of the succession often depends on how those emotions are handled.
That’s the finding of a new study, conducted by the Family Business Program at The Family Institute at Northwestern University, which concluded that for the transfer of power to be a success, the current business owner needs to carefully process beforehand what the future might look like from an emotional standpoint — and not just focus on the business part of the decision.
“These businesses really live inside them,” Alexandra Solomon, a member of the study’s research team from the Family Business Program at the Family Institute at Northwestern University, told BusinessNewsDaily. “This is a time that owners need some support.”
Statistics show only 30 percent of U.S. family businesses stay in the family from the first generation to the second, Solomon said, demonstrating that the transition period is a vulnerable time for family-owned businesses.
Having put so much into a business themselves, many owners’ top difficulty is allowing another person — even a family member — to run what they built, she said. “Trusting anyone else seems to be getting in the way of letting go.”
According to the study, family dynamics and unresolved emotional concerns, as well as internal influences such as trust and worldview as well as interpersonal influences like co-worker relationships, gender roles and marital quality, also all are factors that can aid or hinder the succession of a family business.
To get through the transition process, Solomon said business owners need to carefully consider how they ideally see the succession taking place.
“It is really important for the owner to define for themselves what a successful succession looks like,” she said. “A lot of times, that whole conversation is not open for discussion.”
Allowing yourself to picture retirement as a positive experience also is critical, Solomon said.
Business owners need to focus on the rewards they’ll receive in retirement for their hard work previously — whether it be spending more time with grandkids, playing golf daily or traveling for weeks at a time.
“Reminding them that this is a mark of their accomplishment seems to help,” Solomon said.
Solomon also said business owners should not be afraid to talk about their feelings, whether it's with their spouse, a family business counselor or a therapist.
“Even just talking has healing value,” Solomon said.
The study was based on in-depth interviews with the owners of ten family businesses. Its full results will be published in the upcoming issue of Family Process.