Keep the family business where it belongs — in your family!
By Charles D. Epstein, CLU, ChFC, AIF®
If you have a child or other family member positioned to take over your company when you retire and a transition plan in place, congratulations are in order. But if you’re like most family business owners, you’re not even sure whether any family members want to take over.
If you have your heart set on keeping the business in the family, don’t despair. You can take several steps to generate interest among younger loved ones.
9 Ways To Entice Your Kids
Unfortunately, many children aren’t interested in taking over the family business because they’ve absorbed only the worst parts of running a company — the fact that their parents often work long hours and are tired when they come home.
And if parents don’t involve their children in the company as they grow up, it can also be hard to sell them on the business’s qualities. Therefore, you have to look at your succession as a marketing project.
Although you must allow youngsters to choose their own career paths, you can improve their view of your company. Here are nine ways to make your business more appealing to them and older children:
- Take them to work with you. Many children who spent time at work with their parents have fond memories of it. In many instances, the love and passion for the family business starts with those early visits.
- Be enthusiastic about your company. Some owners pride themselves on never talking about work outside the office. But how can you expect children to know and understand the significance of your family business if you never discuss it with them?
- Talk to your spouse and family workers. Help them understand that their views can go a long way toward coloring your children’s attitudes about your company.
- Encourage your children to work outside your business. Doing so will help them develop an appreciation for your business and allow them to experience different management styles. You can sweeten the deal by offering them a higher-level position or a bonus when they return to your company.
- Don’t step in to fix problems in your children’s area of responsibility. If they aren’t handling something well, talk to them privately about it. Then, step back and let them do what they think is right.
- Involve them early on in decision making. Assign varying responsibilities to your children, such as designing and creating content for the Web site. Of course, you probably won’t want to do everything they suggest, but at least they can have some say over company matters as well as use their management skills and creativity.
- Be open about your plans. Business owners frequently play their succession plans close to the vest in part because they don’t want to start a family conflict or they feel discussing family money is distasteful. The sooner you can inform your heirs about your succession plan, however, the sooner they can make their own plans. It also gives you time to modify the plan if necessary.
- Announce that your retirement will be permanent. Retirement can be difficult because an owner’s business often takes precedence over nearly everything. Your potential heirs will feel more inclined to run the company if they believe you won’t return to intervene in business affairs that you’ve announced they could manage.
- Don’t divide the business equally among heirs. Doing so can cause discontent between family workers and family shareholders. That’s why it’s critical to plan well in advance: You can see who among your children or management team has the talent and genuine desire to run your business.
Sending The Right Signals
Although you can’t force youngsters to enter the company, you can profoundly influence how they view it. Pay attention to the signals your children and other young relatives receive about your business and paint a balanced picture. Most important, be willing to let time and your children determine the rest.