Should You Take Over the Family Business or Start Something New?
Introduction
Whether you are the sole heir to a family business worth 70 million dollars in annual revenues or considering starting your own venture, the decision is crucial and should be made thoughtfully. This article explores the factors to consider when deciding whether to take over a family business or start something new.
Understanding the Business Dynamics
Your family business, with annual revenues of 70 million dollars, is an ongoing concern with a profitability of 3 million dollars per year. Such a significant asset comes with responsibilities and expectations. Here are a few points to consider:
1. Family Dynamics and Expectations: Is there an expectation that you will take over the business? Will you be required to chair the operation and hire management, or would you prefer to hold the business for the next generation? Your family dynamics play a crucial role in this decision.
2. Personal Goals and Aspirations: How do you feel about the business? Would you be more comfortable as a caretaker for the next generation, or do you have ideas that could drive growth and increase profitability? It's essential to align your personal goals with the business's potential.
3. Market and Operational Insights: Understanding the current state of the business can help you make an informed decision. For instance, if the business is in petrochemicals manufacturing and trading, knowing its profitability, cash flow, and employee count (400 employees) is critical.
Alternative Paths
Considering the two extremes offered by my knowledge on similar scenarios:
1. Succession and Transfer: A grandfather started an oil business, while his son ventured into insurance, and his grandson expanded into retail development. All these businesses are thriving today, interconnected through a series of trusts. This case illustrates the potential for succession within a family business.
2. Handing Over the Business: Contrastingly, a father created a successful business, but his children had no interest in it, leading them to sell the business at his death with no regrets. This example underscores that not everyone is suited to the business they inherit.
Given these scenarios, there are several options to consider:
Sell the Business: If the family or you personally do not wish to take over the business, selling it could be an attractive option. Maintain a Shareholding: Opting to sell the business while retaining a significant shareholding can offer financial benefits and entrepreneurial opportunities elsewhere. Professional Management: Hiring a professional to manage the business while you hold a majority share can provide a balanced approach. Launch a New Venture: If you are passionate about taking risks and pursuing new paths, starting a new business entirely could be a fulfilling option.Personal Satisfaction and Future Prospects
Ultimately, the decision comes down to personal satisfaction and future prospects:
Passion and Interest: Is this something you are enthusiastic about pursuing? Security and Legacy: Do you want to ensure the family legacy is secure through managing the business? New Challenges: Are you eager to face new challenges and pursue your personal growth through starting a new business?The key takeaway is that there is no one-size-fits-all answer. It is crucial to weigh your personal goals, the business's potential, and your family expectations to make the best decision.