Small business owners often dream about passing their company on to the next generation. This is a comforting thought because they know a company will be in the hands of someone they trust. It also puts the new owners into a favorable position since they inherit a business that’s already established in its market and has a certain amount of infrastructure built.
Of course, some issues might arise from this transition. It’s not always a good idea to mix personal matters and business decisions and both the children and the employees might need to take some time to smooth things over.
It’s a process
There will be one point at which the business is formally taken over by the owners’ children, but it’s best if that moment is just a formality and the transition is seen as a gradual process. Start by bringing the kids in on important decisions and show them how the company works from the inside. It’s also useful to give them a mid-level management job within the company, which can be an immensely valuable experience later on.
At the same time, key personnel should also be aware that the business will at one point be passed on, and a similar process needs to occur on their end as well.
Set clear roles and responsibilities
An owner’s child as any other employee needs to have clearly set duties and responsibilities. It sets a bad example if they don’t take day-to-day parts of the job seriously and don’t put in the work just like anyone else.
It’s also a bad practice if the children tend to overstep the line and act beyond their roles and duties, as if they own the company already. This is something to be discouraged from day one.
Things might get increasingly complicated if you have more than one child. Even if your kids have the best possible relationship, things might get difficult when money and responsibility are involved. Setting up equity early on will help you settle the matter smoothly.
The simplest way to go is to divide the company equally amongst your kids, but that’s not always how things work out. For instance, sometimes one of your kids might want to take a more passive role in the company, and the equity needs to reflect that fact.
The change between the owners should be an event of its own. Once your kids actually take over the business, you should use the occasion to help promote the business and let everyone involved that the business is going steady under a new administration.
The advertising for a new administration should be all-encompassing and cover every possible marketing channel out there. It usually ends with a big corporate event, but don’t hesitate to use branded items such as promotional hats, mugs, USB drives and alike. The goal of the advertising is to signify a new time, but also to reassure everyone working with the company about the future of business under new leadership.
Running a business is more than a full-time job. A lot of the times, business owners bring their work home and end up spending a lot of their personal time on the job. This can create problems at home and it’s imperative for a business owner to work on finding the proper balance between the two.
This becomes even more difficult when your family is involved in the business as well. Systems need to be put in place to set clear boundaries between professional and personal relationships.
When not to pass the business on
It’s not necessary to pass your business on to your kids. It’s a choice many make but it doesn’t mean that it’s the best way to go in all cases. If you feel like your kids would be happier pursuing some other career, it’s wrong to push the company on them.
Also, the company becomes a separate entity from its owner at one point. When it does you’ll need to consider the needs of the company separately from the needs of your family and take that into account when passing the business on, or not.
To sum up
There are many reasons to pass your business on to your kids. That way you know both your company and your family will be financially safe in the years to come. It’s a process that needs years to be completed from start to finish since you’ll need to prepare them for the executive parts of the job.
The new administration should be a cause to push a big marketing campaign that will put both your business partners and customers at ease about the transition. No expense should be saved on this campaign.