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CEOs

How to Tell Your Kids You Don’t Want Them to Take Over the Family Business

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When it comes to family businesses, succession is a prime concern. A recent survey found the topic to be the second most critical on family business leaders’ minds, trumped only by achieving alignment with family members.

How to ensure succession success? Communicate. Early, and often.  Even if you’re years out from an exit, make clear that you’re considering multiple options, and that nothing is set in stone. Ask your child about his or her plans and career goals. See if he or she even wants to run the business.

You might even bring in an outsider to run the business before your child is old or experienced enough to be considered for the job, as Peter Latta, the third-generation CEO at A. Duie Pyle, a family owned warehousing and transportation business, did. Latta told Inc. that he “thought it was important to create experience at our company with a non-owner leader of the family business,” before potential successors came of age.

But if you’re reading this, chances are those ships have sailed. You’ve closed on the timeshare in Jamaica, or made plans for business number two. The only thing standing between you and the next stage is one of the hardest conversations of your life.

Here are a few tips.

Give as much lead time as possible.

It may be tempting to avoid the conversation as long as possible to maintain a pleasant status quo. But compressing the timeline between revelation and execution will only make things more difficult on yourself and your child.

“Feel like a family, run like a business.”

Performance and executive coach Denise Federer identifies three general types of value systems within family businesses. One puts family first, the other puts business first, and the third balances the two. “You care about family members, you care about their needs, but it’s in balance with the business needs.”

Keep this in mind as you talk to your child about your exit plans. Think carefully about your role both as a business owner and a parent, and to the extent possible, try to separate conversations about the business vs. personal implications of your decision. It’s also crucial not to shut down on a personal level just because your relationship is undergoing professional strife.

Don’t use your cable box to listen to FM radio.

Psychologist Dr. Paul White compares people’s range of communication styles to the evolution of transmitting messages. “People who communicate in Morse code send in the simplest of messages… It is one tone, no emotion, short words, and phrases.” Meanwhile, AM radio wave senders “are a step up in complexity,” while FM “has more depth” but “is still only auditory.” Some people communicate more like black and white TV, others like color TV, others like HDTV — sharing a full range of emotional depth and color.

Think about what type of communicator you are, and what type of communicator your child is. Says White, “the sender of the message and the receiver of the message have to be able to process the same type of data for the communication to be truly effective.”

Consider bringing in an outsider.

As a parent, you can usually predict your child’s behavior during a difficult conversation from past experience, says Federer. “If you know in the past that an individual gets defensive when you share information, I think you need to prepare for that and give them some time to review what you said, come up with their response… You have to be careful that you give them a chance to share their input and then talk about what’s next.”

It may also make sense to invite someone else with a neutral point of view to join the conversation. This doesn’t mean another executive or group of stakeholders from the business, but rather a business coach, therapist, or other consultant who can help ensure the conversation remains professional and stays on point.

Provide alternative ways to stay involved in the business.

Depending on your unique situation, it may be worth coming up with ideas for your child to maintain an involvement in the business. Federer recalls one scenario in which she worked to help an adult daughter who wasn’t qualified to take over the business “understand how she could maintain a relationship with the family business through some of their foundation and philanthropic work.”

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