It just seemed like a couple of years ago you were helping them with their homework or watching them play soccer. In your wildest dreams, you never thought your business might survive you and get taken over by someone else.
Wouldn’t it get great if that ‘someone’ was one of your children?
Seeing that happen successfully doesn’t happen by accident. There is a lot involved in teaching one or more of your children to take over the reins and successfully move forward. Experts say that it's never too early to introduce your daughters and sons to the family business.
The fact is, only one-third of family-owned businesses actually survive to the second generation. The same odds hold true for the subsequent generation, meaning that by the time these businesses get handed down to the grandkids, only about 10 percent are left standing.
Though it may be tough, it's not impossible to be part of that successful 10 percent when the next generation is properly trained. This guide will teach you how to put the "success" in "succession."
It starts when they’re young
Exposing them to the business as soon as they realize that Mommy or Daddy are leaving to go to work is a great time to begin. You don’t want them swinging a hammer a the job site but what great fun it would be if once in awhile you took your child with you to visit a home under construction. Tell them this is what you do when you leave home every day. Get them excited to go with you.
Not every kid is going to be enthusiastic about working for the family. Respect that. If in their formative years they don’t catch the modular home fever, respect your kid enough to listen to what they say about it.
This is very important. Don’t let your kids think they have a one-way ticket to success just because they share your last name. If they know they have a family business to go into, they might not pursue other fields because of that excuse.
Sorry, You Can't Start at the Top
If your child(ren) shows a good interest in becoming a modular home builder like their Mom or Dad by joining you in the business, that is just the beginning.
A lot of young folks want to start in the top seat before they're ready. That's setting them up for failure. There's got to be real-time training and exposure to multiple facets of the modular home industry and business in general.
Not only does your kid have to come to terms with taking things slowly, but you also have to come to terms with the fact that you may not be the best person to teach your son or daughter how it's done.
Remember back to when you were 18. You knew everything and you didn’t even have Google. Your child probably has a lot of that ‘I know what to do and I can do it better’ attitude in them that, Surprise!, came from you.
Maybe your son or daughter should attend college before joining the company or maybe they just want to jump right in after graduation. How about a trade school or accounting classes at the local community college. There are a lot of pathways available to them to join and 'maybe' take over the business.
Along the way, you should also make sure your kid gets acquainted with the people you build for. Lead by example and show your kid how you communicate with clients, but don't push your son or daughter into client territory until he or she has a serious knowledge of the business.
When You Have More Than One Child
Succession is really three different things: leadership, operations, ownership and it's especially important that you recognize the differences.
You may have a son who should only be a shareholder, a daughter who would be great behind the scenes running internal operations and another son or daughter who would be the ideal Sales or On-Site person. By employing this strategy, you may be able to give all your kids a stake in the business without forcing them to compete for a single position.
Giving your successors equal ownership is a trap that many family businesses fall into. Parents are always trying to equalize, and one of the things we know is equal is not fair.
To determine who ultimately gets to take your position as president or CEO, ask yourself which of your children has demonstrated the best leadership skills? Who has the most defined vision of the company's future? Who has the drive to employ that vision? And who does your staff look up to?
There's no doubt it may be a difficult decision, but eventually, what's best for the business will be best for the family.
Proceed with Caution
It's unlikely you'll get away with hiring your son or daughter (especially in a managerial position) without breeding some resentment among your employees. The only solution to this problem is, be honest about your plans as early as possible.
Foremen, current sales staff, if it’s more than just you and even vendors and subcontractors are subject to not being treated the same as treated them.
If one of your employees has expectations of taking over when you retire, and that may not be consistent with what you and your family want, tell them as far in advance as is reasonable."
This is when appointing a mentor may also be helpful. If an employee introduces your kid to the rest of the staff, it is often less controversial than if you were to introduce the kid yourself. In some cases, you may ask that mentor to take your place for a while, as your son or daughter continues to train and the staff becomes comfortable with his or her capabilities.
Time to Move on
The hardest part of the entire process may be taking that final step in passing the torch. Even if your son or daughter is ready to take over, you need to make sure you're ready to step back. I've seen more mistakes in early retirement than you can imagine.
Ask yourself if you'll be able to accept that things may not always operate exactly as you planned. If so, you have to commit yourself to that mindset as thoroughly as you committed to your business.
From personal experience, I learned this the hard way. Before my father decided to retire and turn over the reins of our chain of stores to me in 1974, he used a unique accounting system I called “two lard cans and a desk.”Conclusion
Unpaid bills were put in the first lard can marked “Bills”, then the can was dumped on the desk every Sunday evening where they were sorted and checks were written and finally the Paid bills were put in the other lard can after being hand stamped “Paid.”
Within weeks of taking over, I replaced that system with a Burroughs B90 business computer. It broke his heart.
Only years later did I realize that my father actually enjoyed doing it that way as it allowed him to ‘touch’ every invoice and get pleasure stamping them “Paid”
If you have children and thinking about retiring someday and leaving the business to them, you need to start working on that plan today. Younger children, middle school age, are at the best age to begin working with on taking over the operations as you still have time to talk with them about the future and if the family business is part of it. It also tells them that you value them and want them involved.
High School-age children are going to be a little more difficult to work with. You’ve already missed a lot of opportunities to work with them when they were younger. On the plus side, you can have serious sit-downs with them to discuss everything unless they are playing on their XBox or texting on Tik Tok.
That might not be so bad as that is probably where their business will find its new home buyers.
Contact me at modcoach@gmail.com
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