Family businesses are a prime example of how a family can come together and collaborate to achieve success. When each family member is working toward a common goal, the possibilities are endless. As the founder of the business, you may want to ensure its continued success even after you have retired by appointing a rightful successor.
However, traditional succession plans can create problems when they don’t consider the emotions and relationships involved which could lead to sibling rivalries. That’s why it’s important to consider the family dynamics and common disputes that can arise when creating a reasonable succession plan.
Business continuity disputes
Dealing with competing views on what the future of the business should look like comes with business succession planning. When there are competing siblings, they may define success differently from each other. Likewise, they could argue over the following:
- Ownership or control of the business
- Differing views on the business’s future focus
- Business expansion
When siblings want the business to move in different directions, this tension can spill over into family relations. And possibly undermine the very foundation of the company.
Maintaining family harmony
As the founder, it can be challenging to retire with confidence when your children have conflicting ideas about the business’s future. However, it’s important to remember that each child has their own beliefs about how to scale the business. It’s crucial to ensure that each child’s perspective is heard and to define the successor and ownership structure clearly and with an equitable approach. This means treating your children equally to prevent any accusations of favoritism.
Seniority or competency?
If you’re wondering if you should appoint your successor based on seniority or competency, the answer is more complex. An effective succession plan usually takes years in the making. The proper course of action would be to create a plan that minimizes the risk of conflicts, addresses everyone’s concerns and ensures a smooth business transition to the next generation.
Sibling rivalries are common. But in this industry, it could lead to loss of family wealth and even legal action. To ensure a succession plan’s validity and smooth implementation, you may seek a legal professional to guide your family business into a profitable future.