Seven Steps To a Satisfying Succession

The period of time immediately preceding and following an ownership transition can be full of tension for both the successor and the retiring parent. Left unaddressed, this tension can derail even the most carefully planned transition process. This guide addresses some of the areas that often cause tension during a transition and suggests ways that a successor can facilitate the process.

The life cycle of any successful family business includes a transition period when a parent passes the ownership or management to a younger generation. Typically this younger generation is in the parent’s immediate family — usually his or her children or grandchildren. When the business passes to the owner’s child or children, particularly if the parent is the founder of the business, family dynamics often get in the way of successful transition. If you are in the position as your parent’s successor, you can help ease the transition period by understanding how these conflicts arise.

Parents are often motivated by the desire to see their children succeed and continue in their footsteps. They also want to instill their values in their children. Thus, your parent may be torn between wanting to simply hand the family business to you, and making you work hard for the business to instill character. At the same time, your parent may see you as being unappreciative, not understanding what it takes to make a family business successful.

Passing On Your Dreams
You may be unwilling to sacrifice as much as your parent deems necessary, or you may fail to show the kind of appreciation he or she wants for having given you the opportunity to own or run the business. These negative interactions can stand in the way of transferring the business from one generation to the next. Some of these patterns cannot be easily altered. However, a savvy successor can do many things to help make the transition succeed. Here are seven ways you can facilitate the transfer:

1.  Be Empathetic
Although you have not gone through a transition from parent to child yet, try very hard to understand where your parent is coming from. Most likely, your parent is planning the transition because he or she is thinking of retirement. This is a time in his or her life when things will change dramatically. In the not too distant future, your parent will be working part time or not at all. Your parent’s entire life will change, and he or she may perceive that his or her usefulness will be dramatically reduced. While you are eager to spread your wings and make your own mark in the family business and in the business world in general, your parent is fading into the background. This is a difficult time and many parents cannot let go.

If you try to understand what your parent is going through, you will understand why it is so difficult for him or her to let go of the reins, and it will be easier for you to accommodate your parent’s desire to stay active in the business in some way.

A parent who is growing older may also have concerns about where his or her continuing income will come from. Even if your parent knows you will never let him or her down, he or she no longer controls the business. What if you can’t run it as well as he or she did? Will your parents continue to have enough money in the future to take care of themselves? Your parents are accustomed to being self-sufficient. Remaining so is important to them. The more you understand what your parent is going through, the more you will be able to help facilitate the transition and accept things that you may think are unreasonable from a business standpoint.

2. Be Patient
For many reasons, a transition from a parent to a child in a family business does not occur quickly, except when a sudden death or disability forces the transition to occur prematurely. A well thought out transition plan takes place over a period of years. As long as you know the game plan, be prepared to pay your dues and be patient in doing so. Remember, your parent helped make the business what it is and his or her abilities are significant. Learn as much as you can from your parent and keep in mind that one day you will probably be in the same situation.

3. Work Hard
No matter how much you think your neighbors or friends do not work hard for what they have achieved, there is usually no substitute for diligence and hard work. Show your parent that you are willing to put in what it takes to make the business successful. Find a work pattern that works for you and your family so that you are able to accommodate both. Do not expect anything to be handed to you, and if it is, it will be a pleasant surprise.

4. Respect the Vision
When your parent founded or took control of the business, he or she had a vision to make it successful. Understand what your parent’s vision is and respect it -- even if it is your plan to change it once the transition is complete. Work within that framework while your parent is still part of the family business and implement change only with his or her acquiescence.

5. Be Appreciative
No matter what your true feelings are, it is always helpful to show appreciation for what your parents have done. It probably will not be until after they are deceased that you will really appreciate their abilities, successes and what they have done for you. You truly are lucky to be in the situation you are in, and showing it outwardly,even in small ways, goes a long way to facilitating transition.

6. Foster Family Closeness
In a family business, the family and the business are inextricably intertwined. Although you may see your family members during the work day, it is helpful to get everyone together regularly on a personal level. No doubt, the business will creep into these social occasions, but it is important to let your family members know that you like them outside of the business, and that you want to be with them.

7. Exercise Fiscal Restraint
While you are in the position of successor, do not outspend your income. The easiest way to extend the transition period or to blow the transition entirely is to make your parent believe that you are financially irresponsible. Parents worry about their hard-earned money being frivolously spent by a child who does not understand what it is like to struggle to pay the bills. They also worry about married children getting divorced and having the family business end up in the hands of a hostile ex-spouse. Be willing to live a lifestyle that is less than you would like until the transition is complete. If you don’t, do not be surprised if the transition goes awry.