It’s Hard to Make Changes in a Family Business

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Here’s why—and what you can do about it

Change is essential in any business. Times change, competition changes, markets change—and every business must adapt. But change is hard, especially in a family business. As a family business consultant, I have seen first-hand the difficulties that arise when attempting to create change within a family business, and it’s almost always a generational divide. According to Dennis T. Jaffee in his article Moving a Family Business Beyond the Founder’s Vision, the resistance to change in a family business often comes from the initial founder or current generation in charge. Jaffe writes:

“Many entrepreneurs generate a huge amount of wealth that they want to pass on to their children and grandchildren. They are not yet a family business, but they want to become one. They want to see the wealth used wisely, and their business and investments to continue to add value. But the mindset that led to their success often undermines how open they are to the changes needed to continue business into a second generation. It’s the next-generation dilemma: How do succeeding generations preserve the founder’s legacy and continue to build a thriving family enterprise?”

I have seen this dynamic play out dozens of times, and 100% concur with Jaffe when lays out the most common traps that founders fall into that prevent change. According to Jaffe, they are:

  • “They become so confident in their own superpowers that they stop listening to others.”
  • “They feel that they are the only one who knows how to run the business, so they are not willing to step down or let go.” 
  • “They expect growth to continue and do not anticipate major change.”
  • “They want to find a successor just like them, who will run the business like they did.”
  • “They seek advisors, executives, and even family members who do not challenge them.”
  • “They want their children to repeat their journey of making it on their own.”
  • “They assume that being ready for the future means continuing things as they were.”

Of course, there is resistance to change from the younger generation as well, though for different reasons. In some cases, change is prohibited because of the younger generation’s love and respect for what their parent has built—which can create a fear of speaking up because they don’t want to hurt their parent or tarnish the legacy of the business. It’s an understandable emotion, but it also leads to operational paralysis.

How to Make Change Happen

Change is good. Change is necessary. But making changes that will help the business has to start with an honest look in the mirror from the founder—and action. Here are 7 things a founder must do to facilitate change.

Create a united vision

A united vision is essential for the success of any family business. By aligning all family members around a common goal, you can create a sense of purpose and direction that will guide your business towards success.

Be open to the value of different viewpoints

Embracing different multi-generational viewpoints can bring valuable insights and perspectives to your family business. By being open to diverse perspectives, you can leverage the strengths of each generation and build a stronger, more resilient business that can adapt to changing times.

Share your wisdom

Sharing your wisdom and experience is a critical component of successful family businesses. By passing down knowledge from one generation to the next, you can help ensure the longevity and prosperity of your business. Your guidance and insight can help shape future leaders and build a strong foundation for continued success.

Be open to change, even when it’s hard

By being open to change and embracing new ideas, you can adapt to new challenges and opportunities in the business world. This willingness to evolve can help ensure the long-term success and sustainability of your business.

Be cognizant of how your history and fears shape your viewpoint business decisions

It’s important to be aware of how your family’s history and fears can shape your view on risk and business decisions. By understanding your family’s past experiences and concerns, you can make more informed and objective decisions for the future of your business. This awareness can help you navigate potential obstacles and make strategic choices that will benefit your business in the long run.

Shift your thinking of hiring new roles as an investment instead of a cost

By investing in new talent, you can bring fresh perspectives and skills to your business that can drive growth and innovation. This mindset shift can help you make strategic hires that will ultimately pay off in the long term.

Ask questions and express your concerns

Communication is key in any family business. It’s important to ask questions and express your concerns openly and honestly to ensure that everyone is on the same page. By addressing issues proactively, you can prevent misunderstandings and work towards finding solutions that benefit everyone involved. This approach can foster a culture of transparency and trust within your family business, leading to greater success and harmony.

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