Women have long played a critical role in owning and operating family businesses. According to the U.S. Small Business Administration, there are more than 12 million businesses in the United States owned and operated by women, which employ more than 10 million workers. And those numbers are only expected to grow.
Inevitably, every family business will need a succession plan. The transition of a family business to the next generation of owners can take many different forms, and women bring unique strengths … and can face specific challenges … in that process.
I recently connected with Debbie Bing, President of CFAR, which is one of America’s top management consulting firms, to explore how women can successfully transition the family business to the next generation of owners. Below is a summary of that conversation:
Sylwia: Debbie, you clearly have a long history consulting with business owners on a multitude of issues, including succession planning. What are the unique challenges and opportunities that female business owners encounter, as well as the next generation of women who want a role in the family business?
Debbie: There are issues related to succession planning that are universal for all business owners, but many come with specific nuances and considerations for women. For example, competition among siblings often arises in succession planning for a family business, and with that comes long-held expectations around gender roles within a family. Those expectations can be difficult to change sometimes, but it’s an important conversation to broach nonetheless to create the opportunity for full consideration of everyone who has the aptitude and interest to take on a role in the family business, and in a way that leverages their strengths.
Establishing credibility and expertise is also important for women seeking to take on a role in the family business – especially if the business or family has not historically considered women for leadership roles. Women often must work a lot harder to establish their credibility and have their experiences seen.
Regardless of where a woman is in the life cycle of a family business, balancing the choices that need to be made with one’s time and energy is particularly challenging for women. We are moms, sisters, daughters, friends, members of our communities, in addition to business owners. Managing the multiple roles we play and creating the right balance across them can be difficult to say the least. Women need to take the time to truly get in touch with what’s important to them. Don’t let others define that for you. That’s why it is so important for women to advocate for themselves. That can be hard, but it’s incredibly important.
Sylwia: As a second-generation owner of CFAR, you’ve personally experienced working through the dilemmas of business strategy and succession planning. What are the key lessons you have learned that you can share with other women?
Debbie: What I’ve learned, first and foremost, is to think carefully about your “why” and your purpose in relation to the business. As I stated above, don’t let others define that for you. Take the time to reflect upon and identify why you do what you do and what your motivations are.
It’s also important to recognize that a business transition is not just a handoff. It’s not one moment in time. It’s a process. It’s an ongoing transfer of knowledge and organizational history and a collaboration across generations. Think of it as a side-by-side process between new and outgoing leadership.
Another lesson learned is to pick your battles. There are things worth holding your ground on, and others that you can just let happen. It’s OK to let some things go. Keep the big picture in mind.
Finally, think about what you want your imprint to be. What do you feel passionate about? What will your particular contribution be? What’s the legacy you want to leave? Having that in focus can be an incredibly helpful guide in being a successful leader.
I believe both continuity and disruption are healthy for a family business. The question is, What is the through line? What is the thread from the past to future? Commitment to certain values, even if expressed differently across generations? Family cohesion? Entrepreneurship? That thread can and should evolve and adapt, but adhering to the essence of it is important.
Sylwia: Many business owners struggle with when to engage the next generation about joining the family business (or not). What is your philosophy about when to begin having those conversations and how?
Debbie: It’s important to equip the next generation with a set of experiences and expectations from an early age, much earlier than any specific conversations about taking over the business itself. The next generation needs to have a basis of experiences and understanding to even answer that question. That requires experiences to familiarize them with what the business is, how it was built, its role in the family, and what the future could look like.
There really is no such thing as “too soon” to expose members of the next gen to the family business in the right way. It’s all about having age-appropriate conversations. As time goes by, those experiences should naturally evolve. It can be helpful to have a documented roadmap to identify what those milestones are and when to approach the next conversations and arrange for the next set of experiences. It’s all about meeting the next generation where they are.
Sylwia: What about next-generation family members who have no interest in joining the family business (or have no aptitude for it)? How do you approach those conversations?
Debbie: Start with the assumption that most family members won’t work in the family business. Normalizing that is important. There are many other roles to play in a family enterprise other than working in the operating company. Talk about those other roles and opportunities, such as serving on a “family council” that acts as an intermediary between the family and the business, helping to guide a family foundation or a donor-advised fund, or participating in critical company events (e.g. employee appreciation events) without actually having a formal role in running the business. The bottom line is there are many ways to make a meaningful contribution and be part of the family story, and that should be communicated clearly.
Sylwia: What are some of the unique strengths that women bring to succession planning? Likewise, what are some of the pitfalls you’ve witnessed?
Debbie: We all know that women are used to wearing many “hats.” Ownership hat. Leadership hat. Family hat. Women are naturals at balancing many roles, which is clearly a strength when running, and transitioning, a business. We are good at the balancing act that a multitude of demands on our time requires. And that demand is never greater than when bringing on new leadership.
Women can also be very persistent, which we have had to be, as history shows. That is a well of strength we draw on. That tenacity serves a business well throughout the transition process.
As far as pitfalls, women sometimes hesitate to ask for what we need or deserve. We need to advocate for ourselves more. Similarly, many women have a tendency to hold back in striving for that next job or promotion or role in the family business that feels like a stretch. That being the case, being clear about desires and expectations is tremendously important during the succession planning process. Honesty, clarity and forthrightness are essential for all parties to achieve what they want to achieve.
Sylwia: Any final thoughts or words of wisdom for female business owners who are at the beginning stages of thinking through succession planning for their businesses?
Debbie: Seek outside sounding boards in traditional and nontraditional ways. Whatever you are experiencing, there are others who have experienced it before. That can be professional advisors, colleagues, friends, peers in other settings. Arm yourself with perspectives of all kinds.
Also, continuously think about your motivations and passions. Being clear-headed about why you do what you do can be a tremendous asset in the succession planning process. Women don’t need to trade off between all the roles we play. We can live all our multiple identities meaningfully. We just have to find the balance of where to lean in and when.
