Over the years, working with hundreds of family-businesses, I have heard a common phrase, “Someday my (son/daughter) is going to run this business.” I typically respond with three questions-
1. Is your son/daughter prepared to take over the business?
2. When is someday? Do you have a plan?
3. Does your son/daughter know what the plan is and are they in agreement with it?
Here is a typical example: One of my clients was a successful owner of a chain of dry cleaning stores. He was upset because his son, who was in and out of the business over the last 10 years, was leaving again. The father couldn’t understand why the son was leaving for a sales job with an uncertain future. Our conversation went something like this:
“Someday he is going to have this business,” the owner told me.
“When?” I asked.
“When I am ready to retire.”
“When will that be?”
“When I get tired of the business,” he replied.
“Are you tired of the business now?”
“Of course not. It’s how I make my living after all.”
“So it won’t be his business for quite some time then?”
“No one ever just gave me a business. He has to earn it.”
“How will he earn it?” I asked.
“By waiting around until I’m ready to retire.”
“Have you told him your plan in doing so?”
“He knows. Every time he leaves I remind him. I tell him it’s a good opportunity and to be patient. But this week he said to me, ‘I don’t want to wait around until you die.’ ”
“Will he have to?”
“No. When I’m ready to retire I will hand it over.”
Out of the Nest without a Flight Plan
It is ironic how well some family business owners have well-thought-out strategic business plans, yet their plans for their family are unclear and left open-ended. I urge all my family business clients to put together a plan – for the future of their family in the business, as well as their financial future. It will not only give owners and their family members a sense of security, but it will keep family members engaged and motivated in their current and future roles in the business.
One thing that always amazes me is how often business owners keep a blind-eye to the inadequacy and unpreparedness of their sons/daughters to take on a leadership role in the business. Too often, a son or daughter plans to take over solely based on their right of entitlement rather than their actual ability, or what they have done to earn the job.
I had a client whose son was in a key sales role in the business. The son spent most of his time hanging out with the other guys in the shop or was off on “sales trips” in California for the week and rarely, if ever, come back with a sale.
The father was fully prepared to anoint this young prince as President “someday.” What a disaster that would have been for his business and the 50 + employees who worked there. I suggested that the son needed development and that we put him in a leadership role in the company. He was put in charge of a small subsidiary, working with a CPC coach and an internal mentor (the company’s COO). The coach and the mentor went to work showing the son the ropes and what it really takes to run a company (i.e. no hanging out, no “sales trips”). He was made accountable. The son decided to leave the company less than three months later. The father recognized that handing over the business to his son was merely a pipedream. His plan radically changed and the business was sold within the next three years.
I don’t want to imply that all generational transitions are a disaster. I have seen amazing sons and daughters move into a company leadership role and achieve great success. In each and every case though, there has been a plan. There are a number of strategies that worked well. For example:
1. Starting from the bottom and getting involved in every phase of the business (with professional coaching and development support) and not moving up until ready. One of our client companies is now being run by a brother and sister that followed this route and they have grown a nice little business into a regional industry leader.
2. Learn the business somewhere else. One client had a son who was not developing professionally in the business because, as I saw it, his being around dad was stifling his growth. The son, with my coaching and his father’s blessing moved to another company (different industry) and developed his leadership skills there. I was able to still work with him as a coach. He had the luxury of a great leader role model in his father, with the opportunity to grow away from dad’s watchful eyes. As planned, the son came back into the business and within five years became President – with his father as Chairperson, but he essentially retired in Florida.
Family Business: From One Generation to the Next
Family Businesses are the backbone of this country and I love working with them. It is truly inspiring when I see family members working together in a business as a strong, committed team. And it is even more inspiring when I witness a generational transfer that I know will work successfully. That does not happen by chance. It requires objective assessment, planning, communicating, training, mentoring, true commitment and, upon occasion, some very courageous conversations.