Family businesses facing tech challenges need to ‘reboot’ and show their resilience
There are more family businesses in the South East of England than any other area of the UK. They form an important part of the UK economy and - just like other businesses, across all sectors, they are affected by fast-changing technology.
With family businesses, however, there can be even greater challenges on how best to embrace the digital age. Finding family members who have the skills to lead the business in this accelerating global economy can be difficult. Embracing innovation and encouraging a smooth transition to the next generation needs to be a priority.
As an advisor to family businesses I was keen to explore how family firms have approached such challenges. Charles Russell Speechlys has recently commissioned some in-depth research into this topic involving leading academics, national and international family businesses and their advisors. The resulting research report, entitled “The Connected Generation: Rebooting family business succession for the digital age” makes interesting reading. The most surprising finding, in my view, is that in many ways our research debunks the general stereotype that technology is the remit of the ‘next generation.’ Family business owners are keen to respond to the challenges of the digital economy and are largely aware that innovation gives family firms great opportunities to ensure that the next generation engages with the business.
Embracing Technological Change
It is fair to say that younger family members are connected to their peers and an increasingly globalised world through social media and a network of technologies. They rely on Facebook, Instagram and other social media channels and communicate in a very different way to older generations. Younger family members understand how consumption patterns are changing and they can spot where the family business is lacking the expertise it needs to develop in a particular area.
Adapting to Change
It is not the pace of technological change which seems the biggest area of concern to the future of family businesses. Attitudes are shifting: members of this connected generation may not want to just follow the well-trodden path into the family business - there are more opportunities out there for them and they may not receive a huge amount of credit from their peers for just following in Mum and Dad’s footsteps. The most important thing is for members of the different generations to have strong and open communications about their future plans and the opportunities ahead. Family businesses have survived, and prospered, in times of major change, and will continue to do so.
Driving the Business Forward
The overriding message from our research is that honest and open conversations between all generations are critical to sustaining a future for the family firm. In order to keep innovating and make a success of transition to future generations, family businesses must:
- Make transition more collaborative so that the next generation feel they can make a difference and test their ideas.
- Create a framework to introduce potential next generation leaders to the business and manage the complex legal and emotional issues involved in transition.
Bringing the Next Generation into Your Business
We have also produced a comprehensive guide - “Connecting generations: a guide for entrepreneurs and family businesses” - which examines the legal and governance issues faced by family businesses at different stages of their development and offers some practical guidance, particularly around the area of succession.
Five practical tips to bring the next generation into your family business
- Teach them by example when they are young - its never too early to start - pay them to work in the business at weekends or in the holidays.
- Send them on a ‘next gen’ course to teach them relevant leadership and entrepreneurial skills.
- Listen to their passions and identify ways they can express them in the context of the business; see how the business can adapt to encourage their participation.
- Ask them to help you solve a technology related problem or run a social media campaign; give them ownership of it and the resources to do it.
- If they say they don’t want to join the business now, try to avoid ultimatums; encourage them on their path and keep an open mind about where they might fit in the business later.
This article originally appeared in Surrey Life.
News & Insights
Charles Russell Speechlys advises Juno Health pharmacy group on its acquisition of the Avicenna Pharmacy group
Juno Health further establishes its position as one of the largest pharmacy chains in the Northeast of England.
Construction Case Law Update
Our Construction experts deliver an update on the latest case law developments
Non-resident CGT changes re UK real estate: the beginning of the end, or the end of the beginning?
Further changes to the taxation of UK real estate have been made, with effect from 6 April 2019.