My father started our local floor covering store before I was born. As the first born, I started working there when I was ten years old. My four younger siblings all worked there too. At a young age, we all were working hard while our friends were out playing, but we had some money in our pocket. It was the early phase of the joy and pain of growing up in a family business.
Today, the business is still doing well under the leadership of my brother and sister. The rest of us moved on a long time ago. Figuring out everyone’s role and delivering career satisfaction can be difficult in the family business. Expectations are high. Days off are rare. Overtime is expected.
Family businesses are the backbone of America, but they are challenging. 50% of all new businesses succeed – but over 50% of the successful ones will fail when the 2nd generation takes over. So, let’s take a time-out and make sure we have the right leadership plan for the future.
Before you start building your succession plan with Junior still in their crib, there a lot of things to think about. First, and foremost, what are your kids good at and what do they have passion about? If it’s not at the “store”, help your loved ones find the path to happiness – at any age. Working at the family business as a first job is usually a good experience. But after they are finished with school, what is truly the best fit for them. Sometimes, choose the family business, but learn over the years that it wasn’t’ the best choice. When that happens, help your kids make the right decision for themselves. If they love the business, make sure that they are set up in a role that they can succeed in. You need strong employees at every level. Just because their last name is on the building doesn’t mean that they need to be the next boss.
If they are leadership material, take the time to map out a long-range career path that starts at the bottom. They will earn the respect of long-term employees if they prove their talent and energy at every level. Track their development with regular reviews to make sure you are both meeting expectations. Make sure they know that their advancement to the top is your mutual goal, but it has to be earned.
When multiple siblings are involved, it’s important to have special communication. Have meetings outside of the office (and outside of the home) to talk about the company business plan. Make sure everyone is still excited about the long-range plans for the business. You are family, so everyone should have a voice in the big picture, even if their role is a lesser one. Once you’re back at the office, the hierarchy needs to be back in place.
Make sure you are honest with everyone about your long-term plans including retirement. Postponed transitions can lead to resentment. Is your child going to be an employee, a partner or the next owner? All parties should clearly understand your intentions including your lawyer and accountant. Your children’s families have financial goals too, and there is the right time for you to stop blocking their progress. Let your family’s babies take your “business baby” to the next level. You will have your new role as an advisor but they need room to make changes and lead for the future.
From the time they took their first step, you wanted to see your children succeed. Do everything you can to get them in a position to achieve their best, whether that’s as the next boss, a most-valued employee, or succeeding in a different industry.
I’m very proud of my brother and sister who have made the family business stronger. I’m just as proud of the two sisters who found their joy in other careers.
What is your company’s succession plan? Is it in writing? Will the next leader be respected for earning the role? Are you preparing to give up control?