Generational Businesses – How to coach the next generation

by | Aug 23, 2024 | Articles and Reports, Blog

Succession Planning for Family Businesses: Managing Leadership Transition

As of 2020, an estimated 4.8 million family businesses operated in the UK, contributing over £575 billion to the UK economy. The majority of these businesses are small — with three-quarters being sole traders and 21% employing fewer than 10 people.

Ask any family business navigating a succession phase, and they’ll tell you the hardest part isn’t the paperwork, it’s handing over leadership.

The Challenge of Leadership Transition

For existing business owners, it can be difficult to pass the reins to the next generation, especially when the younger group brings fresh ideas and technology. One side may aim to preserve the legacy, while the other seeks innovation and growth. The key is finding balance and collaboration.

When the experience and wisdom of the older generation meet the energy and creativity of the incoming one, family businesses can thrive. Achieving this requires a shared vision and, above all, honest and open communication.

Common Mistakes in Family Business Succession

Succession planning in family businesses isn’t just about finances or control, managing leadership transition is equally critical. Here are some common challenges:

  • A dominant figure holding too much power
    Founders often play a central role, but impartial voices at board level can help balance influence and guide the business forward.

  • Family members in unsuitable roles
    While nepotism can offer opportunities, it can also hinder performance if roles don’t align with skills. External advisors or impartial directors can help ensure the right fit.

  • Lack of a formal succession plan
    Whether the goal is to pass the business on or sell, having a structured plan is essential for continuity and peace of mind.

  • Mixing family and business dynamics
    Emotions and personal relationships can complicate decisions. However, with proper planning and communication, family businesses can be a source of both success and joy.

Ready to Secure Your Business’s Future?

Succession Planning is key to protecting your business and family legacy. At OCG Legal, we offer tailored support to help your family business manage leadership transitions, navigate complex decisions, and plan for long-term success.

Contact us today to learn more about our Succession Planning services.