Leaving the Business to Your Children
We got to talking about how the transition was going, and I was happy to hear that it was going as well as he had hoped. He did admit to a few rough times; brought about by differences in the way he and his sons deal with challenges, but overall he was confident his son shared the same vision for the company, and that his son had the experience and knowledge to continue his legacy.
Many business owners have thought about having a child take over their business at some point. But as many of you have heard, most businesses do not survive the transition to a second generation of ownership, and even fewer make it to a third.
Besides the issues of about whether a child is qualified, there are also issues about the child's desires, their dedication and willingness to sacrifice.
If you have ever thought about having a child succeed you in business, you might want to ask yourself the following questions to make sure it is in both of your best interests.
1. Does your child really have an interest in the business, or are you hoping that someday they'll come to love it? It takes a passion for something to inspire a person to continually want to improve. This is true whether we are talking about business, the arts or some other occupation. If your child isn't sure about what they want to do, it is OK to have them work for you, but do not count on their taking over. It would be better for them to discover where their true interest lies without the pressure of feeling like they are going to hurt your feelings.
2. Have you set up a formal training program for your child? Today business is more complex than ever, and the repercussions for making a mistake, or being out of compliance of some regulation or another, has never been higher. Most business owners have accumulated so much knowledge through the years they could scarcely begin to tell you where to start. However, you can give your child/ successor an important head start by having them work in every department of your organization. This will help them to see the big picture and give them an appreciation for how important every person in an organization really is.
3. Does your child understand the responsibilities and sacrifices that so often come with being a business owner? I know it's a stereotype, but most successful business owners are self-made, and many of them overcame tremendous obstacles to become successful. Part of their motivation was to make a better life for their children. However, sometimes there is a fine line between "a better life" and "spoiled". Many children of successful businessmen have grown up with privileges their parents didn't have, and while that does not necessarily mean they are "softer", they are, in many cases, untested. If they have never faced adversity, they may not be able to handle the pressures of business, especially when times are bad.
One way to prepare them for their future responsibilities is to hold them to the highest standard while they are working for you, and pay them no more then they are worth.
4. Have you expressed your dreams for the company and shared your regrets with your child? Sharing your dreams not only helps your child to see your vision, but it also can inspire them to continue or even expand your vision. Sharing your regrets and failures can help them understand that failure is an important part of business, and that success is not guaranteed. Knowing you made a few mistakes can also make your success seem a little less intimidating.
5. When the time comes to turn over the reigns will you be able to do so? No two business owners see every issue exactly the same way, and what's right for one owner may not be right for another. No matter how carefully you train your child, they are bound to do some things differently from the way you would have done them. Accept it. Once you retire, it is OK to offer advice, but you need to be able to detach yourself from the role of decision maker.
Having a child succeed you in business and seeing your company thrive under your heir's leadership can be a tremendously rewarding experience. However, it won't happen without planning and hard work.