Are you in? I don’t know… am I? You tell me!
Survey after survey indicates that as many as 80% of business owners would like their family to carry on their business. Similar surveys indicate that far fewer would-be successors share the same interest. And for many of those who do, there is frustration because they have not been invited into the business in any serious way. The solution? Open and honest communication.
Please understand this is about your future, your family’s future and the future of your business. Positive communication is absolutely foundational to creating a legacy and ensuring the continuity of your family’s business.
Experience indicates that the root cause of family issues related to family business transition and continuity generally comes down to a lack of positive communication and the inability to make good decisions together.
What is the concern?
- Parents not openly discussing the business, its dynamics, challenges and opportunities with their children
- Parents and children not presenting their expectations, goals and aspirations with each other about what role they might want - or not want - each other to play in the business and why
- Parents and children not being open about what is important to each of them in their individual future outside of the business
What you need to know
At a family business event that had multi-generational representation from the families involved, an exercise illustrated how poor communication is at the core of most transition issues. Imagine parents and their children going to separate sides of a room and being asked their greatest concerns about being in business with their family.
|I’m not ready to retire – what am I going to do every day?
||I need my parents around to help me learn how to run this business.
|How do I choose which kid(s) to run the business?
||I’m worried about how my siblings will react if I am chosen.
|What if my kids do a better job than I did? What will people think of me?
||I hope I can live up to my parents’ expectations and do as well as they did.
|When we started the business we really had nothing to lose. Back then we were willing to take risks.
||My parents have built a business with considerable value. How can I manage that risk?
These real statements show the views from two generations. What is not apparent from the words on the page are the underlying feelings that are not typically communicated. The parents and the children are worried about the same things, but because of the parent-child dynamic, there can be a perceived risk in appearing vulnerable. The result is fear, uncertainty and procrastination.
What can I take away?
- Have family meetings. Regularly. Include all adult family members in these meetings whether or not they have expressed an interest in being involved with the business
- Create a family participation plan to outline how family members can become owners and / or employees. Be sure to actively engage all generations in this process
- Address and openly share all your fears
- Be clear that anyone expressing interest in joining the business is doing so because they actually want to join the business, not because they feel they ‘have’ to or ‘ought’ to
- Discuss the need for a wide range of policies such as performance management, personal and professional development, compensation and advancement.
To have these kind of discussions, it is essential to create a safe environment that fosters open communication where everyone is encouraged to listen, to understand and to be understood. Be prepared! Each person from each generation will have varying opinions, thoughts and feelings. It is important to have these conversations before inviting anyone, or asking to be invited, to join the family business.
To learn more:
Partner, Business Transition Services for Western Canada
Director & Practice Leader, Business Transition