Is the Next Generation Ready to Run Your Company?
April 20, 2022 by Interchange Capital Partners
By Ahmie Baum
Running a family business is hard work. It takes time, dedication, and sacrifice to realize your vision and make it work for years to come. Many of our clients have built their companies from the ground up and often wonder how and when to pass the reins to the next generation. If that sounds like you, we can help.
Interchange Capital Partners has experience helping family businesses navigate this important opportunity. We provide comprehensive valuation and succession planning so that our clients can feel confident and comfortable when passing the torch to the next generation. Here are 3 steps you can take to prepare your company for a transfer to the next generation.
One of the most common issues we find with family businesses is conflict between generations around vision, values, and expertise. Sometimes the younger generation may not recognize and acknowledge the previous generations’ hard work and sacrifice that went into creating the business. The next generation may have new ideas about how to run the business or see different opportunities that may leave the older generation disagreeing or feeling threatened. Sometimes the previous generation makes this situation worse by assuming that they know everything and dismissing the next generation because they do not have the previous generation’s experience and knowledge. Whatever the case may be, these conflicts and others must be recognized and resolved before transferring the business, if you want the company to thrive for years to come.
How do you resolve conflicts? First, recognize that they are inevitable and normal; all family businesses have them. Then open the lines of communication. A good place to start is for the previous generation to tell the story of the business. Talk about their history; the challenges, successes, and failures as they built the business. This allows for an appreciation of “how we got here”; it creates a common history. The next generation must articulate what their vision is as well as communicate what they see as the obstacles and opportunities. These conversations lead to a common vision for the future; allowing both generations to buy into the company’s future success. It’s important to celebrate generational differences; this reinforces your values both as a company and as a family.
Learn to Delegate
Along with resolving intergenerational issues, one of the best things you can do to help the next generation (and your business) succeed is to delegate. It’s easy to fall into the trap of doing everything yourself; after all, no one cares as much about the business as you do. But that is a drain on time and energy that will end up costing you in the long run.
If you don’t delegate, the next generation will struggle to lead. It’s important to allow the younger generation to take responsibility for certain tasks and processes so they can get used to what it takes to run the company. This also gives them a sense of ownership over their role.
Allow the next generation to handle problems with your oversight first, before withdrawing from the business completely. Not only will this make the younger generation feel like a valued and important part of the business, but it will also give you a chance to hone their skills and provide important feedback and give you the “peace of mind” that they can take the business to the next level.
When it comes to succession planning, don’t go it alone. Transferring ownership to the next generation involves many factors, and deciding how and when the transfer takes place requires input from several different parties.
Professionals such as CPAs, attorneys, and business consultants can and should be used to help your family navigate the process. Though professional input is important, it’s only as good as your ability to navigate the conversations effectively.
At Interchange Capital Partners, our role is to help you navigate these conversations effectively. We sit in the middle of your network of professionals, acting as a bridge throughout the process, helping you get clarity, understanding, and action while coordinating and translating the financial and legal jargon that goes into building a strong succession plan.
How We Can Help
Transferring your business to the next generation is not an easy task, but it doesn’t have to be overwhelming or stressful. We at Interchange Capital Partners specialize in helping clients navigate this transition. To learn more about how our business succession strategies can serve you, email us at firstname.lastname@example.org or call our office at 412-307-4230 to schedule an introductory appointment.
Ahmie E. Baum is the CEO and founder of Interchange Capital Partners, an independent registered investment advisory firm providing collaborative, comprehensive, and disciplined wealth management around Transition Planning Unlocking a Lifetime of Work. With over 40 years of experience, Ahmie specializes in serving individuals, professionals, and family-owned businesses, helping them manage the complexity that comes with their unique circumstances. He is known for giving his clients guidance, education, and resources to make wise financial decisions that help them protect their wealth while achieving their goals. Ahmie and his firm strive to go above and beyond with their unparalleled client service and family office services that help their clients experience confidence in their future.
Ahmie graduated from the University of Pittsburgh with a bachelor’s degree in psychology and holds the Executive Certificate in Financial Planning from Duquesne University School of Leadership and Professional Advancement. He is also a CERTIFIED FINANCIAL PLANNER™ professional. He recently received the Certificate for Family Business Advising (CFBA) from the Family Firm Institute. He spent 42 years working at EF Hutton and UBS, where he earned the prestigious Wealth Advisor designation. Nationally recognized, Ahmie has been named in the past to the Barron’s Top 1,000 Financial Advisor List. When he’s not working, Ahmie enjoys spending time with his wife, Sara, their three children, and their granddaughter. He also enjoys investing in his health through yoga, meditation, and plant-based eating. His other hobbies include woodturning, golf, reading, listening to music, and biking. He is active in his community and serves as the Foundation Chair of the Jewish Federation Community Foundation of Greater Pittsburgh and supports the Big Brothers Big Sisters of America (BBBS). To learn more about Ahmie, connect with him on LinkedIn. You can also watch his latest webinar on The Hidden Dangers of Not Having an Exit Plan.
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