The organic sector is doing well. But the future of many companies is at risk: Often, the succession of owners and management is not regulated. This is also because intellectual values are passed on.
The industry is doing well and could continue to do so – “if it weren’t for the generational change,” said the Deutsche Unternehmerbörse (DUB) two years ago. And warned that the industry must “necessarily deal with the search for a successor”. The problem is not industry-specific; it seems to be typical for owner-managed companies, as the internet portal Nachfolge.de explains by referring to the Family Business Network. According to the worldwide association of family businesses, only one in five companies succeeds in finding a successor within the family down to the second generation, and only seven percent succeeds down to the third generation.
An example of this is the situation in agriculture, as outlined in the recently published Critical Agricultural Report 2020 (Kritischer Agrarbericht 2020): According to the last agricultural census carried out in 2010, only one third of the farms had a secure farm succession. Farm succession is less and less often ensured by family members, but conversely, many young and well educated people who cannot take over a parental farm are also looking for a way into agriculture.
There is no lack of potential successors. This is also the case in the organic sector. But here, the generational change is much more difficult, which is due to the specific orientation of the companies. In the organic sector, what is a popular buzzword with other people is part of the company’s DNA: purpose, meaningful economic activity. When shareholders and decision-makers change in the organic sector, values and ideals are also handed over, not just management and shares. That is why the requirements for a potential successor are higher, says the DUB: Besides entrepreneurial spirit, the successor must also have an ecological attitude.
However, only a small part of the difficulties associated with the change in generations is due to the choice of successors. Finding such a successor is one of the decisive phases of the process, but the real problems arise elsewhere: “The question of securing the company and jobs through a suitable succession arrangement is recognised too late in some companies or an arrangement is repeatedly postponed,” says the “Guide to Succession by Young Organic Entrepreneurs” (Leitfaden zur Nachfolge junger Bio-Unternehmer) published by the Association of Organic Food Manufacturers (AöL).
Good preparation is essential
The timely and systematic preparation of the company succession is an essential prerequisite for the long-term maintenance of the company. Who takes over the company, whether it is someone internal or external is ultimately irrelevant: it is usually a matter of setting up a business, the success of which depends on the right attitude and the entrepreneurial qualifications of the people involved. In its guidelines, AöL suggests that potential successors take a close look at themselves, taking into account these three points, among others:
- The organic idea
- Personal development
- Leadership competence
But even if these criteria are assessed positively, this does not mean that the transition will be successful. Social and psychological aspects are often underestimated, the AöL guidelines state. And this despite the fact that they affect all those involved – the potential successor, employees, suppliers and customers, first and foremost of course the entrepreneur and his family. Especially in companies that are strongly influenced by the personality of their owners, the latter often find it difficult to let go of their “life’s work”. Here, we present some of the cases compiled by AöL that describe successful searches for, finding and implementing of successors.