Heir or hire: Securing the future of your family jewellery business
by Tamanna Bhasin | February 23, 2025 2:39 pm
By Danielle Walsh
Family jewellery businesses represent more than commerce; they’re legacies shaped by decades—sometimes generations—of shared dreams, sacrifice, and triumph. As integral pillars of local economies, these enterprises provide stability, create jobs, and uphold traditions that resonate far beyond their immediate circles. Yet, one of the most critical challenges a family business will face is determining who will take the reins when the time comes.
Succession planning isn’t just about choosing a successor; it’s about safeguarding values while adapting to a changing business landscape. Alarmingly, studies reveal that only 33 per cent of family businesses transition to the second generation, and fewer than 10 per cent reach the third. This isn’t because the businesses fail financially, rather succession planning is often postponed or insufficiently addressed.
Whether you’re envisioning the next generation of your family leading the charge or considering the expertise of an external leader, the key is starting early, staying focused, and thinking strategically.
Why succession planning feels so hard
Why do so many family businesses avoid succession planning? For many business owners, particularly in industries like jewellery, the business isn’t just a source of income; it’s a reflection of their identity. Handing over the reins can feel like giving away a part of themselves. For others, the emotional weight of family dynamics can make the topic feel overwhelming, even divisive.
Yet, avoiding the conversation can lead to unintended consequences. If there’s uncertainty about leadership, customers who trust your name might start looking elsewhere. Employees could feel insecure about their future, potentially seeking stability with competitors. And family relationships—already complex—might fray under the strain of unspoken expectations.
Proactive succession planning mitigates these risks. It sets clear expectations, fosters transparency, and ensures the business is positioned for long-term success. Starting early, ideally a decade before retirement, provides the time needed to identify, train, and support the next leader while addressing potential conflicts.
Consider this: A goldsmith who started succession planning five years before retirement discovered his successor needed significant training in managing vendor relationships. By starting early, he had time to teach these skills gradually, ensuring the successor felt confident and ready.
The case for a family successor, when legacy matters most
For many family businesses, passing the torch to the next generation feels natural. Family members bring an inherent understanding of the business’s culture and values, often combined with a deep emotional investment in its success. Customers and employees alike find reassurance in continuity when a familiar family face assumes leadership.
Take, for example, a family goldsmithing business. The founder’s daughter grew up in the workshop, learning the craft and the art of connecting with customers. When it came time for her to take over, she brought fresh ideas for modernizing the product line while staying true to the family’s artistry. Her leadership transition was seamless, preserving the business’s legacy while positioning it for growth.
Key benefits of family successors
1) Legacy preservation. Family successors naturally carry forward the traditions and values that define the business. This continuity is invaluable in custom jewellery, where trust and craftsmanship are paramount.
2) Intrinsic motivation. Family members often feel a personal responsibility to see the business thrive, inspiring them to work harder and innovate more boldly.
3) Flexible retirement options. Unlike external hires, family transitions allow retiring leaders to stay involved on their terms, offering mentorship and guidance without overwhelming the new leadership.
However, family transitions can also be fraught with challenges. Skill gaps, entitlement, and interpersonal conflicts are common obstacles. For example, one jewellery business struggled when the founder’s successor, lacking managerial experience, faced difficulties with vendor negotiations, production timelines, and staff management. These challenges were eventually resolved through mentorship, but they underscore the importance of preparation.
When external expertise works
Not every family member is cut out for leadership, and that’s okay. Sometimes, bringing in external talent is the best choice for the business. External leaders can provide fresh perspectives, specialized expertise, and objectivity that may be difficult to find within the family.
Advantages of external leaders
1) Proven expertise. External hires bring fresh skills and solutions. For example, a business dealing with inefficiencies hired an external leader who modernized operations and optimized vendor relationships. Their expertise streamlined processes and positioned the business for future growth.
2) Unbiased decision-making. External leaders can make objective decisions that prioritize business goals free from family dynamics.
3) Innovation. An external leader can introduce new strategies, from digital marketing to streamlined inventory systems, that keep the business competitive in a fast-changing market.
Of course, hiring externally requires careful consideration. Families often worry about cultural fit and losing control over the business. These concerns can be addressed by starting with a trial period or bringing in an external leader to focus on specific areas of the business, such as operations or marketing, before expanding their role.
The best of both worlds, a collaborative approach
In some cases, the ideal solution isn’t an either/or—it’s both. Blending family and external leadership can offer the continuity and innovation a business needs to thrive. This hybrid model works particularly well in transitional periods—when family successors need time to develop their skills.
Consider a jewellery business where the founder’s son lacked the experience to manage day-to-day operations but excelled in building customer relationships. The family hired an external leader to oversee operations, allowing the son to focus on sales and branding. Over time, the external leader mentored him, gradually transferring knowledge and responsibility. The result? A confident successor ready to lead and a business which continued to flourish.
This collaborative approach bridges skill gaps, fosters trust, and ensures the business benefits from both professional expertise and family values.
Your succession playbook, steps for a smooth transition
Effective succession planning involves actionable steps tailored to your business’s unique needs. So, how can you ensure a seamless transition?
1) Start early. Planning at least a decade in advance allows time to train successors, resolve conflicts, and test leadership capabilities.
2) Define roles and expectations. Clearly outline the qualifications, skills, and responsibilities required for leadership. This clarity helps avoid misunderstandings and conflicts.
3) Provide training opportunities. Equip successors with the tools they need to succeed. This might include shadowing the current leader, taking business courses, or managing specific projects.
4) Engage a neutral advisor. A facilitator can mediate conflicts and provide objective advice, ensuring the process is fair and transparent.
5) Test compatibility. If family and external leadership are blended, allow them to collaborate on real decisions before formalizing the arrangement.
Overcoming challenges and tackling resistance
Succession planning is never without its hurdles. One common challenge is the founder’s reluctance to let go. Many business owners struggle with the emotional aspect of stepping back, especially if their identity is closely tied to the business. For example, one goldsmith admitted feeling lost at the thought of retiring. A trusted advisor helped him redefine his role, allowing him to focus on special projects while his successor handled operations.
Entitlement among successors is another obstacle. Establishing clear expectations and performance metrics can prevent resentment and foster accountability. In one jewellery business, a successor was required to manage the busiest season independently before formally stepping into a leadership role. This trial not only tested their capabilities but also earned them the respect of their team.
Building trust in external leadership
For families considering external leadership, trust is key. Start small, allowing external hires to prove their value through specific projects or roles. For instance, a struggling jewellery business brought a consultant to optimize inventory systems. The consultant’s success in reducing costs and streamlining operations built confidence, making the transition to a broader leadership role seamless.
Open communication is equally important. Involving family members in the selection process and maintaining transparency about goals ensures everyone feels invested in the transition.
A legacy worth protecting
Your jewellery business isn’t just a company—it’s a legacy of creativity, trust, and resilience. Succession planning is your opportunity to protect that legacy while preparing it for future growth. By addressing challenges head-on, fostering collaboration, and planning proactively, you can ensure your business thrives for generations to come.
The key is action. Whether your successor is your child, an external hire, or a combination of both, a thoughtful, strategic plan ensures your legacy continues to shine bright.
Source URL: https://www.jewellerybusiness.com/behind-the-counter/heir-or-hire-securing-the-future-of-your-family-jewellery-business/