Family togetherness takes on a completely new meaning when it comes to handing down a family-owned business. No one wants a fight, but instead of taking steps to minimize conflict, many business owners — and their offspring — avoid the subject altogether. Still, succession planning can occur with minimal feuds but only if everyone is willing to work toward a common goal.
So how can a family business be successfully transferred to the next generation? Here are some tips for keeping family feuds to a minimum before and during the transitional phase:
- Recognize and accept people’s differences. Whether you’re passing the business down or about to assume responsibility for operations, understand that one generation is not going to have the same sensibilities as the other. Styles, drive, and levels of commitment might vary. Passion for a business is a personal matter. If you’re the founder and you’ve built the business from scratch, the next generation may not fully understand your experience. You cannot will someone to have the same drive and dedication that you’ve brought to a family business.
- Don’t assume that the next generation wants the business. One of the sad realities about family-owned businesses is the unfulfilled expectation that the next generation will take over. What if the next generation wants to break from tradition and open a new venture in an entirely different area? Wants and expectations should be discussed openly without presumptions.
- Determine if heirs are even experienced enough to run the business. It’s not unusual for a business owner to withhold responsibility, neglecting to delegate duties that can help groom the next generation. If the owner’s children don’t get the necessary experience, then how can they be expected to take over? Do they garner the kind of respect among company workers that’s necessary to run a business successfully? If so, is the respect genuine or is it because their parents own the company? If the latter is the case, then problems are likely to occur and must be addressed before any succession takes place.
- Consider fairness. One of the biggest challenges for family-run businesses is the fairness issue. If the company employs more than one child and/or grandchildren (and nieces and nephews) with wide-ranging skill levels, it’s not so easy to compensate in a fair manner. It’s not uncommon for the next generation to engage in jealous behaviors. Think of the way school children who don’t get their way behave and you’ll have a small idea of what can occur. Scolding may help temporarily, but a long-term solution — a plan — is better.
- Think and act like a business. It’s only natural to bring family problems to a family business, but when the “family” part of the operation begins to erode the “business” part, there’s a problem. Most family businesses tend to fail not for business reasons but because there’s an unresolved family issue. A family needs to act like a family, but when everyone’s working the focus must be on the business. This is especially important if the company has a significant presence in the community or serves its customers in a public setting like a restaurant.
- Get some good advice. No one can succeed in a business without support from advisors who have expertise in your industry as well as family-run businesses. Avoid family feuds by tapping into that expertise. A council of advisors, for instance, can provide perspective and objectivity. Your support system should also include a trustworthy accountant and attorney. Remember, it’s a business.