Why Failure To Regenerate Causes Family Businesses To Go Bust Despite Having The Com For Staying Together

The survival rate of a family business is dependent on its ability to regenerate.

Often family businesses start out with a lone founder that putting all his will and grit to produce entrepreneurial value that impacts life of all stakeholders and gives a chance to his family to have carryon with the legacy left behind.

By the time the first generation gets hold of the business the dynamics change and the old playbook might render useless.

The Life Cycle Of A Business Strongly Corresponds To The Life Cycle Of The Family

Regeneration becomes a necessity because the overlap of the two cycles. Smart family understand this fundamental very well and prepare for them:

Here are some of the reasons why most:

• Overestimation of core business growth prospects
• Lack of value generators that create new sources of growth
• Resource lockup in a decaying business
• Weak performance orientation culture

Regeneration with all above constraints is still possible, in our work we have identified below steps that work well.

STEP#1: Assess Your Core Business Health And Formulate Future Moves

Core business assessment is key to understanding the prospects for current business.

Your core business could be 1) growing yet unprofitable 2) shrinking or 3) stagnant. Most often family business owners are not analyzing the correct state of core business and base future prospects based on factual analysis rather than intuition. This leads to tying up more resources than necessary into legacy business.

STEP#2: Develop Future Perspective And Identify Potential Future Core Options

Develop future horizon prospective about your core business to ensure continuity

We are living in times where technology disruption, startup ecosystem, and customer preference are fast changing and continuously evolving business dynamics. Looking into options that may become options of tomorrow is then a necessary act.

STEP#3: Allocate Resources Along With Next-Generation To Balance Current And Future Growth

The next generation of family business owners are key for energising new growth option.

The option family business leaders usually have for next generation is either to give them succession option in the legacy business or start new venture of their choice. Both render risk of failure. The 3rd option is to find new option into adjacency of the core business where the legacy business could expand into.

These steps will reinstate regeneration into your family business, develop not only future leaders but also future core businesses.

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