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Failing to let go of the reins in a family business can be fraught with problems and often harmful consequences to the Business and all concerned.  

Not letting go leads to the Business crumbling. Crumbling under the strain of family conflict, a lack of next-generation interest or no ‘suitable’ one to pass the reins to.  

With the founder still holding tightly onto control, new ways and progress can be hampered or ignored. All these issues have the potential for Business dissolution. 

Additionally, by not letting go of the reins, the founder may find both their personal identity and future retirement plans can be jeopardised, along with all that they have worked hard to establish. There are no winners in these scenarios! 

Consequences for the Business and Family Members 

Family Conflict: Holding onto power creates tension and disharmony so severe that the Business is disrupted to the point of dissolution.    

Strained Relationships: As siblings compete against each other, and with no handover or transition planning, the family and Business unit are thrust into disarray. Resentment impacts familial bonds and Business unity. 

Next Generation: A lack of forward planning and thinking can make the Business unattractive to the next generation. If they see no development pathway, future executive or ownership opportunities, they will leave the Business to pursue careers elsewhere. 

Stagnation: If the current controlling leadership is unwilling to relinquish control the Business may struggle to embrace or adopt new ideas, challenges and opportunities presented by younger family members.  

Personal loss: Stepping away can be a huge change for a  Business owner who has given their life to building the company, leading to a loss of personal identity, purpose and feeling lost.   

Ways to Avoid these Consequences: 

Simply put, a lack of Succession Planning and poor communication are often the root causes of these issues, issues that can be mitigated with early, transparent planning that aligns with family and individual values. 

5 Helpful Tips:  

1. Start Succession Planning well in advance to ensure a smooth transition. The process takes time if it is to be best developed and executed. 

2. Communicate openly and transparently with all family members to build trust and connection, sharing the family’s vision, values and Business long-term success. 

3. Implement Rules and Structure: Having a family Constitution or Board of Directors can help guide and move the Business to a more formal operation, rather than a purely family-managed entity. 

4. Develop Talent: Support, train, and develop members for future leadership roles. To encourage competence and interest, acknowledge that leadership should be earned, that it is not by right or entitlement. Focus on potential and merit. 

5. Engage Professional advisors. Mentors and advisors can work with you providing a neutral perspective to help with planning, including exploring tax and other implications for letting go and handing over.