von Stefan Heringer
Dear Sir or Madam,
According to a recent study, around 560,000 mid-sized companies in Germany will be looking for a successor by the end of 2026. About a third of them fear closure due to a lack of successors.
Business succession is not just a personal matter—it has significant economic implications, potentially affecting growth, competitiveness, and employment. As a forward-thinking entrepreneur, how can you prevent this issue? What steps need to be taken—and when? We discuss the scenario of passing the company on to your own children.
The Family Business: A Dream of Immortality
Every entrepreneur with children likely dreams of bringing them into the business at some point—ideally, gradually introducing them to the role and responsibilities before eventually handing over full control. Maybe I could imagine this with one of my own children too... That’s the ideal theory.
The Hidden (Social) Risks of Working with Family
In practice, however, this rarely works as smoothly as planned. Significant challenges arise when multiple generations work in the same company.
Just when someone has successfully gained independence from their parents, they find themselves once again dependent on them—this time, in a professional setting. I recall conversations with seasoned entrepreneurs who, even in their sixties, still shudder when thinking back to when their father became their boss. Many have told me with absolute conviction: "I would never do this to my children."
It works the other way around too. If I reflect on how rebellious and opinionated I was with my own parents, I can only imagine how frustrating it would have been for them to have me as an employee!
As a youth football coach, I have experienced firsthand how difficult it is to be fair to my own son. The challenge is to neither favor him nor hold him to a higher standard than his teammates. I want to avoid even the slightest impression of bias, which often leads me to criticize him more than I would another player in the same situation.
This dynamic can be challenging enough in a sports team—but in a permanent work environment, the difficulties multiply.
How Do You Get Out of This Situation?
Of course, there are cases where parents and children work brilliantly together. I know entrepreneurs who successfully phased themselves out while their children eagerly absorbed their knowledge and transformed the business with new ideas. In such cases, a family succession is ideal.
But what if you love your child, have tried everything, and still realize that they simply aren’t suited for the role? In the worst-case scenario, you harm both your child and the business.
That’s why, before your child’s first day at work, you must carefully consider how committed they should be to this path. Are they a prospective successor or just a trainee exploring the business? Even more importantly: What is your exit plan if things don’t work out?
Your Children Have the Right to Choose Their Own Path
Older patriarchs, in particular, often overlook the fact that their children have completely different aspirations. Not everyone dreams of continuing the business their parents built.
It is not your children’s job to make you immortal.
Why should they follow the exact same career path you did? People thrive when they are passionate about what they do, and everyone has different strengths and interests.
Ironically, your financial success as an entrepreneur may have given your children the freedom to pursue their own passions, without being solely driven by financial necessity.
Find Alternative Solutions Early
If the match is right, family succession is the best possible outcome.
But if it requires subtle coercion on one side and forced compliance on the other, then it’s time to find a different solution early on.
These situations can strain even the strongest relationships—sometimes permanently. They can also jeopardize the company itself, potentially leading to its failure.
Best regards,
Your
Stefan Heringer
Neunundvierzig Honorarberatung
21/12/2024
