“I need to tell you something?” Those words set off alarm bells in most parents’ heads, but the ringing can be deafening when those words come from the child you always dreamed would take over the family business. That dream is smashed when the words that follow are “I’m sorry but running this company is an amazing opportunity for someone, but that someone just isn’t me.” Here’s what to do when your child does not want to take over the family business.
We get it. You are far from alone if it’s been your dream to put the successful business you’ve built into the hands of your child(ren). It’s common for “disappointed” or even “angry” to follow a conversation like this. You may have already started working together in the business and you were having a great time passing your knowledge and wisdom to the next generation.
If you find yourself in this situation and begin to make assumptions about why your child is crushing your dreams or try to change their minds, we hope you’ll think about how one of our clients handled this situation.
Here Is Some Advice On What To Do When Your Child Does Not Want To Take Over The Family Business
“Liam” (not his real name, of course) was an engineer who had built a successful cellular company and his daughter (“Megan”) was not an engineer but was an excellent salesperson. When Megan told her father that she didn’t want to take over the company, he was crushed and called us to see if we could change her mind. Persuading people to take actions they don’t want to take is not something we do or any succession planning consultant should do. But exploring why people make the decisions they do is.
When we met with Megan, she was quite candid. “To be successful, this business needs an engineer like my dad at the helm. I’m not going to be the child who runs his company into the ground. I don’t think either of us could recover from that.”
Megan had put her finger on two critical issues: 1) Her relationship with her dad was more important to her than the opportunity to run a successful business and 2) She believed that only an engineer could run the company.
We brought Liam and Megan together, we asked them to imagine what might happen if Megan became CEO and Liam recruited a skilled engineer who would be happy to run the product development and service departments. At first, Megan could not imagine a successful restructure, but promised to keep an open mind for as long as it would take for us to develop a transition plan.
When we presented that business transition and succession plan—complete with timelines and task lists—Megan agreed. We initiated the two-year transition plan and within several years, Megan had paid off the promissory note to her dad. After twelve years of growth, Megan sold her business to a large engineering company. Both father and daughter were immensely proud of the company they had created and grown, and having shared that experience, were closer than ever.
There are several morals to this story.
The first one being: Put relationships first. No business transition is worth damaging your relationships with the people most important to you.
Second, avoid assumptions. Liam assumed that his daughter’s “no” was the end of his dream and was determined to change her mind. He never asked why she said no. Megan assumed that the company had to be run by an engineer. She never even considered an alternative structure of leadership.
Third, communicate! Probe your own feelings and objectives. Why do you want to pass the business to your child? Is it to build family wealth, have fun working together, provide your child a job? Then probe your child’s feelings and objectives. Do they expect that running the business will be what they saw growing up; a parent who misses their kids’ activities because they work long hours and when they are home, talk only about the day’s problems at the dinner table? Just as an example.
Finally, remember that you are offering—not ordering —this opportunity to your child. If a child declines your offer, explore their reasons, find out what makes them happy, and explain that the boundaries for your working relationship will not be the same as those for your parent-child relationship. At the end of the day, understand that a rejection of a job offer is not a rejection of your love. In fact, a rejection from a child who is unwilling or unable to run your company could be the very best thing for your company and your family.
Want to chat more about your family dynamics and see if there are some scenarios we can talk through together? Let’s connect! Schedule a complimentary consultation here.
Relationships First or Business First? How to Set and Keep Priorities
If you were asked by a young entrepreneur to identify the three most important lessons you’ve learned over the course of your career, how many of the three would have to do with the logistics of a product launch, mechanics of installing cyber-security measures or mastering the intricacies of the Federal Tax Code?
All are certainly major accomplishments, but most successful entrepreneurs cite lessons learned that involve people; specifically, how to spot talent and trust our guts, how to draw out the best in others, how to build relationships, and how to mentor skillfully.
We’ve found that these lessons serve owners well as they begin to think about, plan, and implement the transition of their businesses to successors. In fact, we’ve found that the most successful transitions are created by owners who draw on these lessons and put relationships first (just behind business).
That’s a primary reason we made “Put Relationships First” the first of the Seven Guiding Principles (click to download) for the process we use to help owners craft business transitions.
Fools rush in where angels fear to tread.
If you transfer your business in a way that damages or destroys your relationships with the people you care about, what have you gained? For many owners, just the possibility of damaging relationships is the reason they hesitate to (or do not) create succession plans.
And there is good reason to think carefully about “relationship questions,” such as: How will the capable employee who has always dreamed of owning your business react when your daughter becomes the new owner? How will your other children (and spouse) react when your daughter becomes the sole new owner?
The fear of damaging relationships is understandable, but we assure you that there is a way to prioritize and protect your relationships during the transition of your business. In fact, the owners we work with tell us that their succession journey not only did not damage their relationships, but the journey actually strengthened them.
Five Relationship-Building Behaviors
We’ve observed five behaviors in owners who will settle for nothing less than succession plans that keep their most important relationships intact.
1. Communicate your feelings (including fear) and desires with others. We don’t mean to say that you share every feeling with every person. Instead, acknowledge what you are feeling and find a trusted person in whom you can confide.
2. Listen to the feelings (including fear) of others. Successors have fears and aspirations of their own.
3. Become a champion fisherman. Long before you put you finalize your transition plans, we encourage you to go fishing. Test the waters to see what others are thinking with questions like, “I’ve been thinking lately about my future and the company’s future. What direction do you see the company going as I get older?”
4. Make no promises. It can be tempting, especially when celebrating a win, to make offhand remarks like, “If I ever decide to leave, I want you to have part of what I’ve built.” None of us knows what will happen in the future so keep your options open.
5. Accept reality. There are no perfect business successions. Great ones, to be sure, but none perfect. At the core of every great transition is an owner who has set goals, prioritized them and acted according to a set of guiding principles—including putting relationships first.
We hope that these tips, behaviors and strategies helps you to put people as one of the highest priorities in your business and keep them there.
For more insights and guidance, download your complimentary guide “7 Principles of Successful Business Succession Planning” here.
Have you created an estate plan even though you have no intention of leaving this earth anytime soon? Making the appointment with your attorney probably wasn’t high on your list of “fun things to do,” but you did it — partially for tax reasons, perhaps, but ultimately out of love for the people and causes you care about. You now enjoy the comfort that comes from knowing that those you love will be taken care of. Read about: The Four Reasons It’s Never Too Early To Start Business Succession Planning
Planning to transition out of your business is another action item that may not appear on the top of your priority list, but it is a step that owners take ultimately out of love for the people they care about, both inside and outside of the company. Estate and business succession planning share another feature: In both, we know when someone has taken action too late. But is there really such a thing as too early? It comes down to how you think about it.
Estate and business transition planning differ in one important respect: mindset. Business transition planning requires you to adopt a new way of thinking. Why not start today?
Four Reasons It’s Never Too Early To Start Business Succession Planning
1. A change of mindset
Business succession is not (or doesn’t have to be) a one-time event. It can and should be a journey — one of the greatest projects and achievements of your business career. It is a privilege for the owner of a successful company to create a vision and a transfer plan that generates successful outcomes for you, your company, your successors and your family. For many of us, recognizing that privilege is a huge mindset shift.
2. More time equals more options
When she was in her nineties, my grandmother told me that as she aged, time moved faster. She fully expected that by the time she reached 100, a year would seem like a day. When owners tell me that they will begin to plan for the transition out of their businesses at some point “down the road,” I wish I could introduce them to my grandmother.
3. Overwhelm is common but avoidable
I cannot count the number of business owners I have met who have put off even thinking about the eventuality of transitioning their companies to successors simply because they have more questions than answers. As soon as they begin to consider how they will make the transition in a way that does not damage relationships with people they care for, they become completely overwhelmed and paralyzed. Without access to a principle-driven transition planning process, they remain stuck in the web of possible answers for years. As time passes, of course, their options diminish. At the end of the day, you don’t have to have all the answers. Simply start to ask the questions.
4. Come on in — the water’s fine
When it’s done right, business succession planning generates remarkable outcomes for everyone involved. If you just aren’t ready to dive into the planning process, stick a toe in the water. For example, you can start by recognizing the incredible opportunity you have to put a successful business in the hands of someone whose dream is to own a business.
Ultimately, it’s important to keep in mind that not knowing all the answers before you begin is the norm — not the exception.
Elizabeth Ledoux and Laura Chiesman will soon launch their latest book: It’s A Journey – The MUST-HAVE Roadmap to Successful Succession Planning. Available NOW on Amazon! Click HERE to learn more.
During their virtual book launch party, Elizabeth and Laura will share what inspired them to write this book and how it will impact family and private business owners nation-wide. This relationships-first approach to business transition will help you arrive at your destination—the next chapter of your life— financially healthy, relationships whole and your business in capable hands.
– Meet the authors of It’s A Journey and hear from clients
– Enjoy behind the scenes sneak peeks, special guests, and giveaways
For business owners, the critical event of transition can be a joyful and inspiring culmination of a lifetime of hard work and dedication. Or it can be tumultuous and emotionally complex, causing conflict and rifts in relationships. Which would you prefer?
Join the group of 100 percenters: business owners who have used the authors’ tools and processes to choose and mentor capable successors, position their companies for success, and go on to live happy and meaningful lives. Ledoux and Chiesman layout the step-by-step actions you must take to:
• Set and meet your emotional and material goals
• Communicate compassionately and effectively even in difficult situations
• Resolve dilemmas to achieve the outcomes you desire
• Maintain and enhance relationships with those you value
• Mentor and teach a successor, then step away
• Assess various succession strategies
• Calculate how much you need to live the next chapter of your life
• Create wins for yourself, your successors, family and company
You can achieve these outcomes and move forward with clarity and confidence. Your Next Adventure is waiting…
DISCLOUSURE – Investment advisory services offered through FirstWave Financial, Inc., an SEC Registered Investment Adviser. Succession planning services offered through The Transition Strategists. Elizabeth Ledoux/The Transition Strategists and Laura Chiesman/FirstWave Financial are not affiliated with each other. This presentation is designed for informational and educational purposes. It is not designed as a substitute for advice from professional financial advisors or succession planners. Each individual’s circumstances may be different. Individuals should seek financial, legal, and tax advice or other professional or expert advice based upon their particular circumstances.