Challenges that second generation entrepreneurs face
The charisma and capabilities of the first generation are often the key drivers of the early development of the family business, but they may impose great pressure on the second generation during the succession process. An estimated $10 trillion is expected to change hands and be managed by second generation entrepreneurs. It is certain that the economy of the nation as well as the world will be driven by these second generation entrepreneurs. Technology, competition, and the ever changing workforce in today’s business environment certainly makes it more challenging for these new entrepreneurs. This will be coupled with the active involvement of the first generation in decision making as well as the running of the business.
As the first generation steps down, what should the second generation do to consolidate its role in the family business?
Take those risks and not fear failure: Second generation entrepreneurs can be highly risk averse in comparison to their peers and might go more by research and processes, relying less on their gut. They can even be more brand-conscious and can even fear failure.
It is pertinent to take those risks that are needed for the business to move in the right direction. At the same time, this risk must be followed through with meticulous work to ensure that the chances for success are high. Hard work and diligence will pave the path. They must remember that the first generation entrepreneurs reached where they are today by taking those difficult paths.
Maintaining business legacy: Second generation entrepreneurs need to find the confidence from within to be their own people and get over the awe in which they hold their parents. While they get good hands-on experience, they can be process-oriented and hierarchical. They are expected to take on the role of the visionary and to be able to do this one must trust his/her instincts.
Moving into unchartered territories: The second generation has to redefine processes and operations to extract the maximum out of businesses and make them future ready. For this, they need to foray into unchartered territories. How long will the business sustain in its current form? What profit will you make in 5 years? Will the customer like your product? They need to secure an enabling environment within the family business to ensure a positive response for these queries. Dealing with this volatility is something that these entrepreneurs need to ready themselves for.
Succession planning: For the current generation of business leaders to realise their true potential, succession planning within the family plays a key role. Clarity in the minds of family members regarding their expected rights and duties is important, because a lot of it is about perception. It is important to make ensure that there is a positive progress in the right direction when it comes to the future plans for the business.
Young business leaders need to understand global trends, emerging risks and opportunities much better and at a detailed level. Challenging and even breaking barriers; taking calculated risks; continually focusing on their people; making innovation the new normal—these are the cornerstones to success for the second generation entrepreneurs.
This article has appeared on Bizztor.