Alternatives_to_Bequeath_a_Family_Business

Alternatives to bequeath a family business The young generation often does not have adequate preparation to lead the company, lacks the years of experience and often its vision of the company is different from their parents. Not to mention the fact that often the memory of the hard-working parents, forming their own company, are not encouraged to follow in their footsteps. It all makes the succession not an easy process. In the rush of current issues and daily decisions related to the functioning of the company, the question of succession is often overlooked or underestimated and constantly moved away for the future. According to the PriceWaterhouseCoopers report, as many as 50% small firms in developed countries, there is no succession. Moreover research among American companies shows that only 30% of small businesses survived the first generation change, while only 13% survived the second generation change. Only 25% of the companies in carrying out the succession, they use the assistance of external consultants. There is also very important thing which is lack of knowledge about issues of succession, postponing succession planning, in the belief that there is still time, and now there is no point to deal with it. There is also concern that the young generation has not been able to fully replace the existing owners and it will not be willing to do hard work and commitment, which may have negative consequences for the company. Meanwhile if the owner after retirement will not find a successor for the company, his or her business can lose family character or just be closed down. Regardless of the decision whether the company will be taken over management of the next generation, or it will be sold, you must plan the succession process. Without this it is impossible to avoid the turbulence associated with the imminent changes or effectively prevent the holding of the owners. Establish and implement a process of succession, like every other project that goes beyond our experience should be left to the professionals. The first step that must be done is preparing the succession. It is to organize the company in a way that will enable it to function without the active involvement of owners. Usually it happens that the founder of the company focuses on a very large decision-making power and is convinced of the rightness of his decisions. His belief is reinforced by the fact that by acting in this way he effectively created a good working company. This well-established mechanism may suddenly stop working with different owner. At some point it is necessary to hire people who are not connected with the owner with consanguinity who will direct the company on behalf of the owners. This stage brings three main threats and challenges. There must be a change in mindset of the owners of the company. They must give the reins into the hands of new managers and give them the benefit of trust so they can freely make decisions about the fate of the company. Also company employees must understand and accept new "center of decisions". It happens very often that despite of the withdrawal of the current owner of the business, employees and managers are looking for solutions with him. The key is also the selection and determination of the principles of cooperation with the managers entrusted with the management of the company. A common problem faced by business owners who employ managers is called principal agent conflict. It depends on the existence of discrepancies objectives owners and managers. In a situation where the owner manages the firm, the conflict does not exist because all decisions are taken on because of his interest. When the agent manages the company, it may well have their personal goals, different from the objectives of the owners. Beyond the proper selection, motivation of managers, it is also important to achieve a situation when in the company there will be an effective organizational and management structure. In many cases the founder of the company, his close family or friends are the only executives in the company. In the case of sale of the company there is a real risk that it would leave with no leading managers and no successors. This situation effectively discourages potential buyers.