The idea of passing along a business to one’s children—and hopefully again to their grandchildren—is one that appeals to many business owners that have started and grown a company. However, making the initial transition from Generation #1 to Generation #2 can be more difficult than it seems.
However, there are a few helpful considerations to make if you have begun to start thinking about a generational shift in your business:
(1) Determine whether or not your children are truly interested in inheriting the business, along with its responsibilities.
(2) If your son or daughter is in fact interested in the business, adequately preparing them for the role is a must. This may include majoring in a related field, or gaining 5-10 years of experience with another business in a similar industry.
(3) In the case that more than one of your children is interested in getting involved with your business, you should establish clear domains for them to navigate and assume responsibility for.
(4) Strategize an “exit” in a way that makes sense. Specific considerations to make include recognizing the fact that you may lose any longtime executives serving under you that may have hoped for the chance to run the company themselves if you choose your child as a successor, as well as ensuring that you are around long enough after bringing on your children to ensure that they understand the ins and outs of the business.
(5) Do not be afraid to consult outside sources (ideally, skilled experts in helping family businesses) as a means of navigating the generational shift in ownership. Avoiding the splitting of family ties over questions about fair distribution should be a top priority at all stages of the process.
For more information on successfully transitioning a family business to the next generation, read the following article from Inc.com:
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