WHY THIRD GENERATION BUSINESSES FAIL

WHY THIRD GENERATION BUSINESSES FAIL

The grandparents start the business. They work really hard to make the family business a success. They make sure that the younger generation never has to worry about money. They put in their heart and soul to make their business work. Then they transfer the business to the second generation. It is very easy for them to pick up from the point where their parents left off. They understand the ins and outs of the business. They were probably made to work with the parents on their holidays. They had seen their parents struggle, so they respect the business. They live upto the expectations of their elder generation and work hard. Although, the business was already set up, they had no worries, they just had to live up to the standards. Now when it is time for the third generation to take over the family business, they do not succeed. Why?

Well because, they just expect the business/money to always be there. Because that is all that they have ever known. To many third generation scions of a family business dynasty, the business was always there. The second-generation parents may even told the third-generation kids to study outside the family business because it will keep them from being a poet, bounty hunter or other exotic career the kids dream about. So, if you're in the third generation why care about what makes your product unique or how you compare to your competitors?

“Pure apathy in business from the third generation. That's why the Chinese say wealth cannot last past the 3rd generation.”

The only way to keep this from happening in a family-run business is to force every new generation to earn what they make. Not every owner must make their kids start the business over from scratch, but having them do real substantive work (rather than menial tasks) in the business.

Other reasons why third generation business can fail are:

·       Poor succession planning. Entrepreneurs can become hesitant to place their passion in the hands of another or simply become too caught up in day-to-day challenges of the business. However, succession can require a multi-stage process of growing involvement and it's crucial for predecessors to dedicate time to creating a business roadmap. Planning cannot be done in isolation of the family or you are planning to fail. Advisers typically make the mistake of promoting planning only with the controlling generation.

·       Family struggle. Shared help among relatives is key for ingraining dedication towards the privately-owned company. Numerous families need methodology that assistance oversee strife in a target and profitable way, so looking for outside help is regularly important to enable the family to out of apparently unresolvable issues.

·       Poor strategic planning. Good planning creates motivation that can sustain the family and business through various trials that arise. Businesses should be careful to balance the needs of family and business – family considerations can restrict the strategic aggressiveness within the business, yet strategic planning should include more than just finances.

·       Different dreams between ages. Generational clash can impede the development of the business, particularly if there's a contradiction in center qualities and missions. The cutting edge ought to be mindful so as not to dismiss set up work techniques and entrepreneurial vision, similarly as ancestors ought to exhibit adaptability in investigating new administration systems and thoughts for advancement.

 For more such insights of life, contact Life coach Vivek Gupta
    
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