In his book, Every Family’s Business, Thomas Deans encourages business owners to prioritize preserving the family wealth over preserving the family business. If it makes more sense to sell the business outside the family and put the money to more profitable use, don’t let pride or tradition lead you down the path to economic disaster. I agree. And I would add another warning. Don’t place the family business above family relationships.
While many family businesses manage to transition to the next generation, the odds are not in their favour. And we’ve all heard stories of children pitted against each other in a bid for power or money while the running of the business becomes secondary. Bitter fights and even legal action against one another are surely not the legacy the original owner wanted to leave to his or her children.
There can be many negative emotions engaged in the struggle to pass on the family business; jealousy, fear, a sense of entitlement, disappointment, anger, frustration. None of these are compatible with good business. Employees see it and react negatively. Customers take their business elsewhere. Parents fear they’ve failed as family leaders and children resent their parents and each other. No one wins. So how do you avoid it?
There’s no silver bullet and if it’s already happening, it may be too late. Better to nip it in the bud before it becomes a problem.
- You probably became an entrepreneur to gain independence and flexibility. Use that to make time for your family, not to work harder in your business. Go to your kids’ soccer games and music recitals. Talk with them. Make time to build those solid relationships so when they get older you can have frank and open discussions.
- Teach your kids responsibility and consequences to their actions. Even if you can afford it, don’t give them everything. Teach the value of effort and reward.
- Give them jobs, but not above their abilities.
- Make sure they also get experience outside your business. They should spend time working for someone else and learn how other businesses operate.
- Encourage them to find their own passion. Set them free to do what they would love to do rather than fail at your business if that isn’t their first choice.
Even if they are the most qualified person to take over your business, they may not want the job. Don’t take that personally. Help them to succeed at who they are, not what you want them to be. Focus first on preserving the family relationships, not the family business.