The health and economic crisis triggered by the COVID-19 pandemic, which has unleashed numerous challenges for organizations, has also opened many opportunities. Businesses are now struggling to work out what comes next after the pandemic. Yet, for small companies, the focus should be on family business succession planning and on how 2021’s political, social, and economic landscape is likely to look. Will the pandemic amplify, alter, or accelerate megatrends already in motion before the virus triggered shutdowns? How will the crisis change how companies do business in the future?
Predicting the Future
It is especially hard to make predictions for the future when bearing in mind the pre-pandemic conditions. Although the U.S. economy was relatively stable, other economies worldwide saw signs of increasing weakness. The pandemic has only deepened those fissures. Now, numerous companies are seeking strategies to help them escape their struggles. Alternatively, they are looking for a way to drive opportunities and sustain growth gained in the crisis. Most importantly, companies must prepare for unforeseen events to come. This will help them recover more quickly from an economic downturn. When it comes to family businesses, succession planning has never been so essential.
Changes Caused by COVID-19
COVID-19 has brought with it numerous problems and challenges for businesses of all sizes. However, small family businesses have, in many cases, borne the brunt of those challenges. The virus has curtailed demand in several industry segments. Restaurants, hospitality, and most service-related industries have laid off staff in large numbers as prices and revenue have collapsed. On the other hand, though, other sectors are booming thanks to COVID. Different ways of operating have also come to the fore. Online ordering has now become commonplace. Accepting contactless payments instead of cash is now the norm. This leaves family businesses with some difficult choices to make regarding the future operations.
Revisiting the Business Model
Some family businesses have stuck to tradition for generations. However, the pandemic has caused a significant shakeup. Some organizations will, inevitably, go under because of their inability to adapt. But, for those that are willing to alter the way they do things, the future is bright. Now could be the time to allow a new generation of family leaders to step forward.
The coronavirus has raised a host of possibilities. There has never been a better time for older entrepreneurs to revisit their organization’s business model and consider new ideas and fresh perspectives. This is the ideal moment for the next generation to bring their ideas to the table and leverage new technologies. By embracing the possibilities, family businesses can transition from past strengths to new strengths despite the recent challenges.
The Advantages and Disadvantages of Young Entrepreneurs
The older generation of family business owners may consider succession planning as simply a way to pass down the organization to the next generation. Yet, there are advantages and disadvantages that younger family members can bring, and they must be factored into the succession plan.
Some advantages are that younger entrepreneurs are often more forward-thinking. They may have a better vision of the future that can significantly move the business forward. Younger family members tend to embrace modern technology and advanced ideas. They may be in touch with the latest trends and have good insight into what customers will want in the future, or the potential for new segments of customers the business can capture.
There are also disadvantages younger entrepreneurs can bring to the business. They may lack business experience, perspective, and sometimes common sense. A younger family member, with less real world experience, may be prone to take chances that could put the business at risk. They may want to rush into decisions without thinking them through. They may also make extensive changes that could take the business in an undesirable direction.
This is where a strategic succession plan can help. Family businesses have the resources of the older more experienced entrepreneurs to act as outside advisors, they can help nurture and support the next generation of entrepreneurs. They can pair their expertise and experience with their younger counterparts’ drive, enthusiasm, and forward-thinking. As a result, the organization can profit from the best of both worlds, moving forward in a post-pandemic world successfully with a succession plan that considers such an advisory role in the transition.
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