Generational change is a great opportunity for company to digitize and modernize

There are hundreds of thousands of family businesses operating in the Czech Republic; according to some estimates, they make up to 87% of all private businesses in our country. Many of them were created at the beginning of the 90s, their owners are thus getting old and starting to think about handing the company over to their children. Experts on this issue advise - devote enough time to the handover and use the opportunity to start the necessary changes.

Handing over a business to a younger generation is a matter of several years, according to the Swiss consulting company FINAD, a successful takeover of a family business usually takes 6.5 years. This time needs to be used so that the children get to know the company, get to know its functioning in depth, try out different positions and gain the respect of the employees.

At the same time, experts recommend that you "throw your children into the water" during this process and let them deal with unpleasant or crisis situations as well. If you shield them from problems too much and solve all the complications for them until the last moment, then they will not be truly ready for a real takeover of the company.

At the same time, as owners, you have to accept that your children will change the company. Younger generations tend to have a more positive attitude towards change or, for example, modern approaches and digital technologies. Do not take it as a grievance, but rather as an opportunity to initiate the necessary changes that you did not have the time, motivation or courage to make.

At the same time, do not wait until your descendants take over the company definitively when implementing changes - start together with them as soon as possible. The data shows that the transfer of companies with a high proportion of modern technologies tends to be more successful than with traditional ones.

Handover of company is an ideal opportunity for honest „cleaning“

Even if handing over the business to your own children is something that is close to your heart, be guided by data and rational facts. Do it as if you were handing the company over to an outside manager who needs to know the real state of affairs for responsible management.

Therefore, detailed analyses should be done at the very beginning of the entire process, popular are, for example,

• SWOT,
• PEST,
• or GAP analysis.

Do not forget to map out the internal processes in detail, because if you have been running the company for decades, many processes have undoubtedly become "used to" and no one thought for a long time whether they could be done more efficiently. This is also confirmed by crisis or interim managers - many companies spend an inadequate amount of time and money on processes with very little to zero added value for the customer, or keep unnecessarily high inventories and thus worsen their cash flow.

For example, we know from our experience that many companies still spend a large amount of time on paperwork and manual processing of documents, which for the company is a waste of human resources on routine activities. At the same time, today there are IT solutions that can almost automate your purchasing processes, invoice processing, or speed up the functioning of the warehouse many times over, thus saving tens to hundreds of hours of work every month.

Focused on technology

Younger people have a much warmer relationship to similar solutions and technologies than older generations. It can therefore be expected that when taking over the company, they will focus their efforts on their implementation. Technologies have undergone intensive development in recent years and are now penetrating even traditionally conservative fields such as agriculture or industrial production.

Typically, young people in companies introduce:

• a higher degree of automation in production (partially/fully automatic and robotic lines),
• IT solutions for streamlining work (enterprise systems for company management and related solutions such as EDI for automating the flow of documents, WMS for speeding up warehouses, etc.),
• migration of on-premise systems to modern cloud solutions,
• artificial intelligence (for example, smart chatbots and voicebots on customer lines),
• or mobile applications (for example, applications using augmented reality for service technicians, applications for registering herds in agriculture, etc.).

Some of the listed solutions are relatively expensive and their integration will take several years, others cost in the order of tens of thousands of CZK and have an immediate positive benefit for your business - for example, mobile applications, AI, EDI or WMS. With these, you do not even have to wait for children, and feel free to start using them immediately. Their return is often calculated not in years, but in months.

If you would like help with digitization and the introduction of modern technologies in the company, contact us. We will be happy to help the outgoing and incoming generation. We will become your consultant and partner, help with the analysis of company processes, find potential and recommend solutions.

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