Handing Over the Family Business
Q: I own a family business but am ready to transition the power to one of my children. One of them is the vice president of sales, and the other is the vice president of finance. How do I choose which one will take over, and how do I deal with my decision?
A: This problem torments every family business owner with children at some point. Make the wrong decision, and your life will be hell, your family will split, and your business will suffer greatly. Fortunately, as uncomfortable as you may be now, this is a once-in-a-lifetime decision, and there is a right answer.
Find out more about dealing with changes in your growing company with Keeping the Family Business Healthy by John L. Ward.
That right answer, however, is different for every business owner with this problem. It all depends on your ultimate goal. Do you want the best person for the job? Do you want the person best able to mend hurt feelings and keep the family on speaking terms? If you're lucky, one of your children will be the best choice for both tasks.
That two of your children entered the family business and earned promotions to their present high positions says a lot about you and them. Certainly there have been business arguments over the years, yet both children have contributed to the company. Your first decision-whom to allow to take over the business-is really your easiest. You must select the son or daughter who has convinced you that he or she will be the best choice for growing the business and its profits in the future.
Your judgment could be clouded if you have a favorite. You must overcome this hurdle and step back from your feelings. Give the situation some thought. Who has consistently met or exceeded goals at the business? Who has been the most innovative? Who works better with vendors, customers and other employees? Who has more of the skills required of a CEO? Has one child made a greater effort at preparing himself or herself for this day? When you remove the issue of "favorite" from the equation, the most qualified person will surface-and that person must be your choice.
Now comes the harder part. This is a test that will tell you whether you've been a good leader all these years. It's one thing to pass over a nonfamily member. There's not much emotion involved. But passing over one of your own children can be heart-wrenching. Hopefully, the family dinners haven't involved just happy talk and football scores, but also discussions of your dreams for the future. Have you given your children a clear idea of how you were someday going to select your successor? Have you let each of them know how satisfied or disappointed you've been with various aspects of their performance? If you've already laid the groundwork for this decision, both children will accept your choice and make you proud. But if you've been less than forthright with either of your children, prepare for Armageddon.
No matter what, you must reassure the one you pass over that you love him or her with all your heart and that it was very difficult for you to choose. Make it clear how you came to your final decision, and explain that much more will be expected of both children as you make this transition.
Rod Walsh and Dan Carrison are the founding partners of Semper Fi Consulting in Sherman Oaks, California and the authors of Semper Fi: Business Leadership the Marine Corps Way.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.