Our previous articles about dealing with differences focused on relating to people who are from different backgrounds than ourselves. But for those considering business transition, the most important differences might be with those who have grown up in their own homes; those we might wish to take over and carry on the business. How do we deal with family differences?
This can be a frustrating situation. One or both parents started and built the business, struggling through the difficult times. They’ve stressed over finances, done without in order to pay employees. They have taken risks, won some, lost some, and through it all, raised a family. They were frugal, set aside money for a rainy day, and even though they can afford better, they still make do in their personal lives.
Then kids comes along with an interest in taking over the business; but with different ideas, perspectives and hopes for the future. They never had to be frugal. The parents always made sure the kids had what they needed, perhaps they were even overly generous. Perhaps they want an executive salary, a new truck, laptop, and iPhone or they have grand ideas about expansion. While the parents seek some security for their retirement, the kids want to hire an assistant so they can take Fridays and weekends off.
People who live in the same house can end up with very different perspectives. Can these parents let the next generation take over and manage the business?
Every Family’s Business
Tom Deans, author of Every Family’s Business has some sensible suggestions for dealing with children and conflict within the family business:
- Your business should always be for sale and your kids should know that they may or may not ever inherit it, depending on opportunities that arise. Deans suggests you preserve the family wealth, not the business. If it doesn’t look like a kid can run the business successfully, don’t let them.
- Never give your kids shares in the business. Gift them money and offer to sell them shares. Their decision to purchase shares or spend the money on a new car will tell you a lot about their readiness to take over.
Communicate, communicate, communicate including asking the tough questions. Make the tough decisions and get clarity on what everyone needs and wants. Deans poses some great questions that you should ask yourself and your kid(s).
While you probably have different ideas about how things should be done, don’t let that stand in the way. Focus on values, goals and a vision of where you and your children want the business to go. If they don’t align, it doesn’t make them a bad person. It just means a different approach. Determine whether the business and the family wealth will survive that plan and prosper or is it a recipe for disaster. Then you need to have the courage to make the right decision.