How Tech is Transforming the Next Generation of Family Businesses
There is a generational gap within family-owned businesses, and owners looking to pass on the business torch to their millennial-aged children are finding that their goals and visions vastly differ. By 2028, more than $10 trillion worth of family-owned and closely-held businesses in the U.S. will have transferred to the next generation of owners. Many questions remain whether the millennial generation will be equipped for success and able to keep the family business alive, but there certainly is hope. In today’s technology obsessed world, millennials are more equipped for success than any previous generation.
I was 27 when I quit my firefighter job to join my family’s business, as vice president under my father. I know first-hand that the transition from one generation to the next can make or break the family business. Baby boomers, like my parents, have spent years building personal business relationships based off of face-to-face conversations and phone calls. Yet, seventy-eight percent of millennial business leaders, myself included, report that they actively seek out new technology to help them manage their business, and incorporate technology in all facets. Like the growing group of millennials taking over family-owned operations, making the generational transition is increasingly complex and personal.
Millennials were the first generation to be born into the digital world that we all have come to know but that has somewhat spoiled us. I expect what I want, when I want it, at the click of a button. We are so used to accessing the world digitally that we expect nothing less. What does this mean for family businesses? It means there are a lot of opportunities, if they make the right moves. Yet, with years of operating one-way under the legacy of the parents, 37 percent of the next generation say they struggle to get the business to understand the importance of having a digital strategy. If it is not broke, don’t fix it, right? Wrong. If we don’t make steps to innovate, the business probably won’t be around for the next generation to take over.
How can two vastly differing generations acknowledge and overcome differences for the benefit of the business? It is essential for the baby boomer predecessors to support their next gen children’s desire to succeed and be open to new ideas, including the new technology, processes, and systems they may want to bring to the family business. After all, the most innovative businesses are those that are open to change and new ways of working. Cloud-based systems for example, can vastly improve business operations with the ability to streamline tasks, store and protect large amounts of data, managing orders, inventory, merchandise, finances and customer service, among others.
Technology, like cloud computing, opens up a realm of possibilities. After two years at the helm of Becker Safety and Supply, one of my first orders of business was finding a new method to control inventory. The old way of doing things meant shutting down the business for two days to complete inventory audits. I felt there was a more efficient way to handle this that could give us two days back in the books and decided to invest in a new cloud-based enterprise resource planning (ERP) solution, NetSuite. Thanks to the cloud we now have one integrated system—ERP, inventory management, warehousing, CRM, and commerce – that helps us better manage our core business processes.
Having an integrated system not only streamlined our processes, but has opened up new opportunities. We started as a small wholesale distributor and now have an ecommerce website, a mobile site, a retail storefront, and a large warehouse. Without cloud-based technologies, we wouldn’t have been able to efficiently manage all of these different channels at once.
Advancements in technology have enabled family businesses like mine to stay competitive–both with physical stores and online retailers. We’ve eliminated the inefficiencies of standalone systems and paper-based processes and have consolidated operations, allowing us to streamline processes, cut costs, and continue growing. Now I know this is just one story, but I truly believe that with millennials taking over, family businesses are more poised for success than ever before.