More Continuity Could Help Bridge The Generation Gap

One of the biggest issues facing small businesses and family-owned companies is the continuation of the business following the retiral, resignation, or death of the business leader or founder.

Although SMEs and family businesses dominate the Scottish economy, 66% of them fail to make it to the next generation, and only 9% to the third.

According to the Scottish Family Business Association, almost 73% want to keep the business within the family. Yet, in spite of this desire for continuity, 57% of Scotland's family businesses have no plans in place for succession So, when succession happens it is usually unplanned and unexpected. The new leader is often propelled, or parachuted, into the role. When they arrive, they usually find a host of problems - staff lacking direction and motivation, a business that is stagnating and a management team lacking focus and drive.

Tackling the challenges of turning around and leading a family business is not for everyone. Successful succession requires special skills - leadership, vision, motivation, passion and an ability to make, and keep making, tough decisions.

Above all, they need to be willing to place people and talent at the heart of their strategy for success.

Take Chris Tiso, who at the age of just 21 took on the reins of the family company when his father died.

Chris had to go through a vertical learning curve, take control of the business and develop a strategy for growth. He has since transformed the business into a fast-growing retail chain that recently completed its first acquisition and is targeting a turnover of £50m in three years.

George Morris, managing director of Morris & Spottiswood, who took control of the family business having originally chosen to pursue a career as a corporate lawyer.

George has since also led a complete transformation of his company, which now has a turnover of more than £130m, is winning significant contracts and is rated as one of the best companies to work for in the UK.

Although now highly-successful entrepreneurs, and leaders of two of Scotland's finest family-owned busi-nesses, both Chris and George had little in the way of mentoring when they were first parachuted into their roles as leaders of their businesses.

It was a classic case of "in at the deep end and survive", both personally and for their businesses.

When designing their growth strategies, both decided to put their people right at the heart of their business - to be people-focused businesses. It meant taking tough decisions over the compositions of their management teams, and pursuing a clear strategy of hiring and developing the very best people.

Today, they have sur-rounded themselves with top talent, including chairmen that challenge, cajole, encourage and question their strategies and decisions.

As business leaders, it frees them up to focus on setting the vision, communicating it, inspiring their teams and setting the standards that they expect of them. Both companies are great places to work, but that is because they have been built around people.

Today, Chris and George give freely of their time, experience and energies to organisations such as the Entrepreneurial Exchange, to start-ups and, crucially, to the personal and career development goals of their own staff. When they first started out, they were very much on their own.

SMEs are the driving force behind Scotland's economy yet, according to the statistics, plenty of family businesses are destined to face significant succession problems. The business community as a whole needs to give this important group as much support as possible.

Tom O'Hara is managing director, TSG Scotland