How Do You Prepare the Next Generation to Run the Family Business?

Prepare the next generation by clarifying whether they want the role, defining what the business will need from its next leader, and giving them responsibility they can grow through. Agree on the decisions they will own, the feedback they will receive, and the evidence you will use to review readiness before the handoff.

A successor can spend years attending meetings, shadowing a parent, and learning how the company works without having much opportunity to lead it. They may know the customers and understand the numbers while someone else still makes the difficult calls. When the family eventually asks whether they are ready to become CEO, everyone has an opinion, but there may be little experience to evaluate.

Watching an experienced leader is useful. So are board meetings, education, and time in different departments. Preparation becomes more useful when the successor applies what they are learning, makes decisions within an agreed scope, and works through the results with someone who can help them improve.

Deloitte Private’s 2026 global succession research, which surveyed 1,587 family businesses with at least $100 million in revenue, identified insufficient next-generation qualifications or experience as the most frequently cited succession barrier, at 35%. The finding describes a concern among large family businesses. For an individual family, the work is getting specific about which experience is missing and how the successor will gain it.

Start with the role they actually want

Before building a development plan, ask whether the successor wants to run the business. Someone can care deeply about the family and the company while wanting a different career. They may want an ownership or board role, or a position within the business that fits their interests better than being CEO.

The conversation needs room for an honest answer. Ask what appeals to them about leading, which responsibilities they would enjoy, and which parts they would find difficult. Explore how the role fits the life they want. If saying no feels like disappointing the family, agreement alone will tell you very little about their interest.

Different roles also require different preparation. KPMG’s 2026 U.S. family business findings, based on 109 U.S. responses, report that 73% are providing on-the-job training for younger generations, increasingly focused on ownership and board governance. Only 36% expect family members to hold most senior leadership roles over the next decade. Preparing someone to be an effective owner or board member can be the right choice. If the expectation is that they will run the company, their development also needs to include operating responsibility.

Clarify that expectation together. Otherwise, the family may spend years preparing someone for a role they never chose, or judge them against responsibilities they were never being prepared to hold.

Define what the business will need from its next leader

Readiness depends on the job ahead. A company entering a new market may need different leadership from one improving profitability, integrating acquisitions, or rebuilding its management team. Start with the direction of the business and the decisions the next CEO will need to make.

Then look at the successor’s experience against those demands. Have they managed a budget, hired and developed people, addressed poor performance, or explained a recommendation to the board? Where have they made a decision with incomplete information and stayed accountable as circumstances changed? Be specific enough that the development plan describes work someone can do.

For example, if the gap is commercial judgment, identify where they can take responsibility for pricing, customer relationships, or a business unit’s results. If they need to develop as a people leader, give them a team to lead with appropriate support. Another year in the same role may add experience, but it will not necessarily address the gap that matters for the next one.

Ask the successor to contribute to this assessment. They should be able to name where they feel capable, where they want help, and what they have been avoiding. That gives you a more useful starting point than a general judgment about their maturity or confidence.

Give them decisions they can own

List a few consequential decisions the successor has owned from beginning to end. Consider what they decided, what happened, and what they did afterward. If every example still required a parent to make the final call, identify a reasonable area where that can change.

The responsibility should match their current capability and the company’s ability to manage risk. It might involve leading a project, managing a department’s budget, or improving the performance of a product line. Agree on the resources available, which decisions belong to them, and when they need approval or help. Real responsibility can have clear limits.

Those limits need to be understood by the people working with them. If employees continue asking the parent for a different answer, the successor cannot get a fair opportunity to lead. The family also loses the chance to see how their judgment develops. This is part of the broader work of handing over a family business, and it can begin well before the CEO title changes.

Allow room for mistakes that the business can reasonably absorb, and stay involved enough to address serious problems. Learning comes from examining the decision and taking responsibility for the response. Quietly fixing everything for the successor removes that opportunity, while leaving them without guidance can create avoidable harm.

Review how they think, as well as what happened

A useful review covers the result and the reasoning behind it. What information did they use? What alternatives did they consider? Who did they involve? What did they miss, and what would they do differently next time? A good result can include luck, and a disappointing result can follow a reasonable decision. Looking at both helps the successor improve their judgment.

Agree on a regular time for these conversations, with additional reviews after significant decisions. Give feedback while the details are still clear and there is time to act on it. Keep it tied to behavior: how the person prepared, communicated, followed through, or responded when something changed.

A parent can provide valuable feedback because they know the business and its history. An experienced manager, mentor, or coach can add another perspective and help the successor discuss concerns they find difficult to raise within the family. The important questions are whether the feedback is informed, specific, and usable, and whether the successor can respond honestly.

For someone who struggles with leading people who watched them grow up, development may also mean practicing direct conversations, setting expectations, and making decisions without seeking approval from everyone who knew them as a child. Those are leadership responsibilities they can begin working on now.

Agree on how readiness will be assessed

Write down what you need to see before the next increase in responsibility. Depending on the role, that might include managing a budget through several reviews, developing a capable team, handling a difficult personnel issue, or presenting and executing a plan. Include how they work with others and respond to feedback alongside business results.

Agree on who will review that evidence and when. The criteria should be understandable to the successor, relevant to the role, and realistic for the opportunities they have been given. If the company’s needs change, discuss how that changes the plan. A new requirement should come with an explanation and an opportunity to prepare for it.

This also gives the current leader something specific to examine when they feel uncertain about the handoff. What remains unproven? What support would reduce the concern? Is the successor missing experience, or is the parent struggling with the changes that succession will bring to their own life? Those questions can require different work. When decisions and expectations keep shifting, it is worth looking at whether the succession itself has stalled.

No development plan removes every uncertainty. The aim is to make a considered decision about the next step, supported by experience, with a clear understanding of where the successor will still need help.

Build the next step together

Start with one conversation about the role, the experience already gained, and the responsibility that would be useful next. Ask the successor what they want to own and where they need support. Agree on one meaningful assignment, who can help, and when you will review it.

Coaching can support the person doing that work. It gives the successor space to examine what they want, prepare for difficult conversations, review decisions, and change habits that limit their leadership. Technical experience and business judgment also need development through the work itself and the people qualified to guide it. When family members participate in coaching, agree on shared goals and what information will be discussed while protecting private sessions. The right level of parent involvement in family business coaching depends on what the development requires.

Give the successor something meaningful to lead, support them while they lead it, and review what you both learn before deciding what comes next.

Frequently asked questions

How do you know if the next generation is ready to lead the family business?

Assess their experience against the responsibilities of the role. Look at decisions they have owned, results they have managed, people they have led, and how they respond to feedback and setbacks. Agree on the criteria before reviewing readiness, and identify what support they will need as their responsibility grows.

Is board experience enough to prepare a family business successor?

Board experience helps someone understand oversight, strategy, and ownership responsibilities. A future CEO also needs experience making operating decisions, leading people, managing resources, and following through on results. The preparation should reflect whether the person intends to be an owner, board member, executive, or some combination of those roles.

What should a next-generation leadership development plan include?

A useful plan names the intended role, the capabilities it requires, the experience the successor still needs, and assignments that will help them develop. It also defines decision authority, available support, feedback arrangements, and review dates. Build the plan with the successor so their interests and concerns are part of it.

What if the successor does not want to become CEO?

Explore what they do want before continuing a CEO development plan. They may prefer an ownership or governance role, another position in the company, or a career elsewhere. Clarifying their interest gives the family a better basis for choosing and preparing its next leader, including considering an outside executive.

How can coaching help prepare the next generation?

Coaching can help a successor clarify their goals, develop confidence, prepare for difficult conversations, and reflect on decisions they are making at work. It complements operating experience and technical guidance. If parents or other sponsors participate, agree on their role and confidentiality before sharing coaching information.

About the author

Dr. Benjamin Ritter (EdD, MBA, MPH, ICF PCC) is the founder of Live for Yourself Consulting and an executive coach who works with next-generation family-business leaders before and after the CEO handoff. For more than fifteen years, he has coached CEOs, founders, and successors who have earned the role and now need to exercise the authority the role carries. He is the author of The Uncrowned CEO and the Amazon bestseller Becoming Fearless.

Connect with Ben on LinkedIn.