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 our own homes; those we might wish to takeover and carry on the business. How do we deal with them?
This can be a frustrating situation. Mom and/or Dad started and built the business, struggling through the difficult times. They’ve stressed over finances, done without in order to pay employees, 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 “Junior” comes along with an interest in taking over the business; but with different ideas, perspectives and hopes for the future. He’s never had to be frugal. His parents always made sure he had what he needed, perhaps they were even overly generous. He wants an executive salary, a new truck, laptop, and iPhone. He has grand ideas about expansion. While the parents seek some security for their retirement, he wants to hire an assistant so he can take Fridays and weekends off.
People who live in the same house can end up with very different perspectives. Can these parents let Junior take over and manage the 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 Junior should know that he/she 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 Junior can run the business successfully, don’t let him.
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. Ask the tough questions. Make the tough decisions. 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 son or daughter. 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.