Ann is a 43-year-old single mom from the east coast. Ann is a great photographer, but no one knows it because she spends most of her time helping to run her parents cleaning business. Recently, at Ann’s parent’s 40th wedding anniversary celebration, her dad made a huge announcement. In his most prideful voice, Ann’s dad said, “My wife and I are retiring at the end of the year and turning over the family business to Ann.” For some people this would be great news, but not for Ann. She likes things just the way they are. She works a few hours in the morning, then spends the rest of her day taking cool pictures of odd and interesting people and events in the community. But now Ann is torn, she really wants to pursue her photography business full-time, but she doesn’t want to disappoint her parents if she decides not to take over the family business.
This isn’t a scene from your favorite Netflix series. This is a tough situation that many children of Baby Boomer business owners are faced with every day. Their parents are retiring and expecting them to put their lives aside to take over the family business. Running a family business isn’t a “no brainer.” In fact, many businesses fold after the second generation takes over, and rarely do family businesses survive to the third generation.
6 Things to Consider Before You Take Over the Family Business
Your parent’s dream of having you take over the family business can become your personal nightmare if there’s not a strong transition plan. Before you say yes and sign your name on the dotted line to buy the company from your parents, here are a few things you must be crystal clear about before you take over the family business.
1. Decide What You Want to Do
Get clear about your personal and professional goals. What do you want to do with your career? Will running the family business make you happy? Are you prepared to buy your parents out? How will your mom or dad handle the transition? Do they respect you enough to really let you run it? Will they support your leadership? Make sure you really want the job before you take it.
2. Get Ready to Not Know Everything
Even though you may have grown up in and around the family business, you likely still need to brush up on specific operational functions. You might be able to leverage your professional education to grow and expand the business, but the most important thing to do is embrace the business culture. Define the business objectives and goals with care and make sure that you’re keeping the business relevant and generating the revenue the business needs. Digital transformation might be necessary, but rely on key experts within the company for advice. Engage outside consultants slowly. Hire people you know and trust. You must know what each of the employees is good at and help them grow. The key is knowing where to turn when you need expertise. Do not connect only with managers, but those at the front lines of service to make sure you are getting an accurate view of the company and customers from all angles.
Studies show family business successions tend to be more successful when there is more support in place to give incoming leaders assurance and resources. However, 70 percent of these businesses fail due to a disconnect between incoming leaders and their employees.
To avoid becoming a statistic, shadow as many key employees as possible to gain insight into your company’s workflows. Spend the day or two in customer service, ride along with a salesperson, spend time in the shipping department. Get involved and connect with the employees to garner their support and trust. By meeting with staff and involving them in the transition, instead of maintaining business as usual, you may be able to refine their workflows as well as identify untapped staff with skills that can provide the business with more value in a different department. Build rapport and empathy for your employees. Ask them how things could be run better. Engaging staff early also mitigates potential turnover and other losses to your business.
You are the new generation and you must earn respect before making major changes to improve the business.
3. Maintain the Company Culture
From handwritten notes to simply remembering an employee’s names, the personal touch will ensure that your company’s values are always realized in every aspect of its operations. My mother taught me a lot about business ownership. As a former manager of senior citizen apartment buildings, she built bridges between residents, staff and the community, and made sure the staff and residents felt valued. Holiday celebrations were planned for tenants who had no family; school children would come and sing and make valentines cards. The most fundamental value of any business culture is that everyone feels like they are a part of something bigger. Treat employees like you care about more than the bottom line. Provide them with care and support—and they will work harder for your company, as a result.
In addition to offering generous benefits, it’s crucial to have frequent and open communication with staff. It’s important to do regular informal check-ins with employees between formal managers meeting, which should be weekly. Even if you can’t be everywhere at once, leverage technology to communicate with staff. Don’t let the rumor mill take over in your business.
4. Mastering the Hand-Off
It could be tough for your dad or mom to give up control. You might need a consultant or exit planning coach to help develop a plan. You also need to gently but firmly restructure any stake they hold in the business to reflect the move forward. Encourage them to become involved in activities that do not immediately affect your bottom line or outside philanthropic and community initiatives. If you are in charge, you need to look like it. Your parent in the CEO role will need to give up their office and they must not allow people to go around you and use them to intervene. As an incoming leader, it is important to acknowledge those who’ve paved the way. Reach out to decision-makers across all departments and offer to have them serve as your mentor. Also, empower managers to give you constructive feedback. This secures their support over the long-term and reassures them that the change in leadership doesn’t threaten their livelihoods or alter company culture.
It is important to create allies early on and weed out those who may not support you and, intead, hinder growth. It’s not always easy, but having honest conversations earlier on prevents damage to your business. Successions are not only a great way to enhance your organizational structure, but also an opportunity to evaluate the business model and pursue new target growth in areas that may not have been apparent to the previous leadership.
6. Putting It All Together
As you assume your new role, keep in mind your job is to not only achieve success for your organization but to cultivate the next generation. Family businesses are often entrenched in the local community, so reach out to leaders in nearby business organizations as well as supportive peers to help your transition go smoothly.
Immerse yourself in business operations and the organizational structure as soon as possible. Make sure to empower managers to share ideas and feedback to ensure a smooth transition. Finally, make sure that all family members are on board in terms of your objectives for the firm and boundaries in terms of communication and management style. A successful succession maintains the integrity of your family’s legacy, maintains employee morale, and most importantly, prepares your company for its next phase of growth.
It is one thing to grow up in the family business and another to be truly qualified to take the reins. Whether the business is a mom-and-pop shop or a manufacturing company or you are an emerging leader in a given field, it’s important to have a deep understanding of the business as well as demonstrated skill in navigating your organization’s culture. Taking over your family business may be a daunting task, but establishing clear objectives early on—from onboarding to team-building—can save you huge expense and relationships in the long run.
One last thing…
If you’ve taken over your family’s business and it has cash flow or staffing problems, fixing them on your own is the worst thing you can do. So, before you have another long night or tough conversation, let us help you get your family business back to running smoothly. That way your parents remain happy, and you can keep your stress down! Don’t worry; not only can we help you but we are very discrete, so go to http://succeedasyourownboss.com and click the contact button. Someone from my team will follow up with you within 24rs.