I was working with a client once who told me proudly, “My son is going to take over the business after I retire.”
I was incredulous. “Do you have a son I haven’t met?” I wanted to ask. This father’s son so clearly lacked the necessary skills that to me, Dad’s plan proved the truth of the old saying: “Love is blind.” His skewed vision is an important reminder to business owners. Before you assume your child will run the business one day, take a step back and ask yourself: Are you accurately assessing your offspring’s capacity for the work you do?
The path to family business succession is strewn with failures. About 70% of founder-run businesses fail or are sold, rather than continuing under the leadership of a second-generation family member. Poor communication and planning are a major cause.
Some parents just naturally assume they know what’s best, reasoning, “If I just keep on this path of assuming my child will take over the business (for which they should be grateful and happy to run), they will eventually just do it and be glad.” They assume this despite the fact that the kid has told the parent over and over that they don’t want to do it. I have occasionally seen this approach work, but I don’t recommend it.
I encourage business owners to talk to their kids about their wishes. Some parents think, “Well, he’s my kid. He knows what I’m thinking.” Actually, he doesn’t know. If you want your child to take over or are open to their doing so, let them know that.
Ask yourself if your child has an enthusiastic and curious engagement with the business. Christine Specht says her parents never pressured her to take over Cousins Subs, the chain co-founded by her father. She returned to management there anyway after college because she thought she could have an impact. “I found my way to the CEO seat by exploring my passions and growing through various jobs” in management, Specht has said. As CEO, she has led a rebranding and expansion of the company.
I don’t recommend that parents make it easy for a child to assume leadership. People don’t appreciate things they’re given as much as things they have worked for. Most of the next-generation success stories I’ve heard involve successors laboring in the trenches for years, running a store, understanding the challenges of filling out a schedule, getting the store open on time, and ordering inventory. Then they might move over to development and get involved in acquiring and developing a site. By the time they reach the top, they know the business from the ground up.
Other successful heirs leave the family fold to hone their skills elsewhere. Roger David started as a dishwasher at the restaurant company his father and uncles founded 56 years ago, GSR Brands. David worked in the company’s marketing department after college, then left to work for more than a decade in the technology industry and as a brand consultant. “That time away from the family business provided invaluable learning but also proved I could be successful in a leadership position,” David wrote in an article on Entrepreneur.com.
When the position of president and CEO at GSR Brands opened up, “I knew I was ready,” David says. Even then, “it was only after my experience, business plan, and references were vetted … that my vision won the job—not my DNA,” he says.
It can be tough for founders to be objective about their children’s talents, and they can’t control what adult children choose to do with them. If you have concerns about succession, there are people who can help. A family business consultant can unravel the agendas of everyone involved and help you get a grip on all parts of the process—the ones you can control, and the ones you can’t.
