“Less than one third of family businesses survive the transition from first to second generation ownership. Another 50% don’t survive the transition from second to third generation”.
How many will survive the digital transition?
A Parent’s Dream…Handing Down the Keys to the Kingdom
Have you worked tirelessly for years in order to provide your children with an easier life? The ultimate goal of parents with their own businesses is to pass down the family business to provide the next generation with a better life. The thought of a failure to do so is more than enough reason to learn the main challenges facing a family business and more importantly learn how to combat them.
Problems preventing this dream from being a reality
These alarming statistics above put fear into all family run companies and the thought of failure terrifies all business owners. Family businesses who have experienced great success in the past need to learn it is of the utmost importance not to let familiarity turn into complacency. In the age of digital transition, it is more important than ever to constantly adapt to the ever-changing technological environment. 59% of the current generation believe they understand the benefits of digitalization but 37% of the next generation say they struggle to get the business to understand the importance of having a digital strategy, and this rises to 43% in smaller family firms.
Where the Problem Resides
Therefore, in many family firms the problem appears to reside within the implementation and thorough understanding of a digital aspect into the company. It is no secret that younger generations have a better grasp of modern technology and could be a massive help when injecting this digital face on the company. Thus, we can learn that information sharing is a two-way street as it passed both ways, from one generation to another. The experience that can be shared from older generations can be reciprocated by knowledge about modern technology from younger generations.
The hardest obstacle whenever passing over a family business from one business to the next is the long period of time it takes to change the thinking as the elder generation may feel their unique ways have shaped the current success of the company.
Embracing Digital Change
The digital revolution is upon us and now is not a time to act passively, however take a proactive stance. Furthermore, digitalisation is an area where the next generation could have an extremely important role to play. The younger generation of today have grown up with new technology. They are enthusiastic to implement it when they take over in family run companies.
Family businesses that are most successful with digitalisation are the ones that listen to their younger generations. It is also important for family owners to listen to business professionals from outside the company. This can ensure to make the most out of their digitalization efforts. The family firms that are very open to new ideas are able to adapt much faster and in a more efficient way.
Younger Generations are Digitally Connected
It is fair to say younger generations are more connected than ever before to their friends/colleagues through various platforms. Facebook, Instagram, Snapchat and Twitter are becoming new forms of communication. Older generations may not understand these to the same extent. Younger generations understand how consumption patterns are different and can notice where family businesses are lacking relative expertise. They may need to develop in order to progress as a company.
Moving Forward & Adapting to Digital Change
When adapting to this new digital era, it is important to consider that family businesses use size to their strengths. They have the unique ability to adapt quickly in terms of innovation due to their more simplistic approach to decision making. Thus, this could be used welcome digitalisation very efficiently and to gain a competitive advantage over larger companies. The important rule is to allow younger generations the take the reins from time to time & implement their relative degree of knowledge regarding modern technology and allow your dream of passing down your business into a reality. This will in turn allow you to continue to run a successful company even through the transition period from one generation to the next.
What it Means to Publishers
With regards to publications, there are many similarities to the passing down of family businesses. It is vital for publications to understand that instead of fighting this transition from generation to generation. They must understand the importance of the new methods of thinking. For these new generations, the same principles remain as previous generations. However the methods of delivery and consumer interaction are much different.
For example, previous generations may have measured communication between editors and readers, sending letters to these magazine/newspaper editors. Whereas nowadays this has transformed into conversation amongst readers. Furthermore, image advertising in traditional print publishing has now turned into performance marketing where advertisers are paid per specific action e.g. sale, lead or click. A further example is reflected through previous generations using classifieds to advertise in newspapers/magazines. Whereas today’s generation focus more advertising through marketplaces in order to connect with more customers.