There is an underlying assumption in a family business that just because you are born into it, you automatically WANT it – the family business, that is.
Truth be told, there are far more children of owners – the next generation – that don’t want the family business. For some, it is not in their area of interest. Mom and Dad started a cleaning company for businesses after hours and it grew. Now, hundreds of employees count on a paycheck as Mom and Dad are aging out of the business. You are their only child and you worked in the business when you were younger.
The assumption is the business will be yours, but did they forget to ask you?
Having a birthright or having worked in the business in the past is not a fiat for the future. One issue I commonly hear is, “I can’t run it as well as Dad did, so why try?” A follow-up to that is, “And he tells me I can’t all the time!” If you are the owner of a business that you want your children to take over eventually, put your ego in neutral for a second. You are not in competition with your children. You have had one level of success; be proud of that. Let them have their success. The next generation needs to be encouraged, not told they will never measure up!
One client owns a floral shop that she and her husband assumed their daughter would run upon their retirement. That retirement has not occurred yet and the daughter has her own career now. That assumption was never formally discussed and the daughter, behind the scenes, has eschewed the business. Now, the parents are feeling betrayed and hurt by their daughter’s lack of interest, and yet they still haven’t formally discussed it with her. Lesson two here is to discuss it early and often with your kids. So how early is too early? It is never too early.
Another business I am familiar with is a haberdasher. The son, who is six, comes in to work each weekend with dad. He does odd jobs behind the scenes like emptying the garbage or saying hello to customers. Lots of customers are drawn in by a true family business and having kids around is a real draw. The child gets a work ethic and dad gets to spend valuable time with his son. The son also develops an appreciation for the good old Protestant work ethic. Lesson No. 3 is that the son is also more likely to buy into taking over the company years down the line, when he has put some sweat equity into the place. Read this column 20 years from now and I will tell you how it goes.
Lastly, the final lesson is: Why would we ever force anyone into something they don’t want? It is no secret that the odds of a family business surviving into the third generation are akin to winning the lottery – long odds. I have been told by clients that they simply inherited the business from their family and don’t really want it. Their reluctance is apparent in the way they run the company. One client told me she took the company only because she did not want to disappoint her father. Again, a really bad business model and a recipe for disaster. This all goes back to an earlier tenet: early and often.
I learned a lesson this past month that is applicable in this case. My wife and I decided, after 30 years of marriage, to re-do our wills. A few things change in 30 years, including the number of kids and who we do and don’t like. I digress! We asked the kids what of ours they wanted so it could be codified in our wills. What we heard: silence. So we asked again and again. Silence. Finally, my daughter had the courage after I personally asked her. Her response was, “I don’t want you to die.”
Well, I am not looking forward to it either but it comes. Even for kings, death comes. So discuss it, before it is too late.
