Preparing a Smooth Exit Strategy
Will your kids take over the family business someday? Prepare today to ensure a successful transition tomorrow.
Q: I've been in business for a number of years, and I'm starting to think about my exit strategy. I'd like to bring one or more of my kids into the business to prime them for taking over, and I worry about what this may do in terms of the employees who've been with me awhile. How can I prepare my kids--and my staff--for this transition?
A: For many entrepreneurs--and this is something I see in many minority businesses--having family involved is a very wise thing to do. While it presents its own host of challenges, keeping the business in the family is an exceptional way to create wealth for many generations to come. It's what so many African American and Latino entrepreneurs have done--and done so well over the years.
Without knowing how old your children are, I can say that the younger you can get them involved, the better. When you have more than one possible choice for whom to turn the business over to, it makes sense to expose each of your children early and let them tell you, through their interest, involvement and commitment, who will be most prepared to take over. It does not always turn out to be the oldest child, even though it's a typical assumption.
When they are old enough, prepare them to think about all the technical aspects of your business and what type of schooling will help them best prepare for their role. By putting the emphasis on education, you're letting them know that you don't expect them to leave high school and jump right in. If you're wanting to get your kids involved to "labor" for you, I suggest you do it over the summer and breaks and keep in mind that their well-rounded education will help prepare them to be a good leader (a quality needed to keep employees engaged) who is well-prepared to move the company forward. Also, and I think this is so important, put them to work! On-the-job training in every department or area you can think of is essential for them.
You mentioned you had been an entrepreneur for awhile, so this you understand. There is no school in the world that can prepare anybody for being self-employed. The term "chief cook and bottle washer" didn't come from someone with a one-track mind. Engaging them in every aspect of your business is not only good for them for the obvious reasons, but it's also an exceptional way to grow their empathy for employees. How can they possibly understand the challenges or issues an employee faces in his or her role if they have no idea what their jobs really entail? Before you hand your son or daughter the keys to your office, make sure they've worked alongside others; this will help to ensure your employees have the level of respect needed to work under your child's direction. There is no worse situation than everyone hating the boss's kid!
Education and training are key, but if I had to point out the most important consideration, it would be to make sure that whomever you select to take on the leadership role shares your vision. Take the time to talk with each child; share your journey with them. Communicate where you see the company going and see who gets the most excited. If your children have their own vision for the company and it's not in line with what you've built, you may want to seek out other options...unless you are OK with what they're seeing.
As for taking care of your current staff, it's imperative that you articulate to them that their role and reward in the company will stay the same and be protected. If you're bringing in an adult child, this is especially true. I don't believe it serves you any good purpose to involve employees in this decision if the child you're bringing in is very young and working under some of the areas we talked about earlier.
In the case where you're bringing in an adult child or relative, expect some level of fallout from people on your staff who may resent you bringing in your family. This will shake itself out in the wash. How you communicate the transition, how you handle yourself and how much information you share in the process will be the driver for how your staff responds. Don't expect everyone to be happy, but work toward that end to the extent you are able--especially if it's an employee whom you really value and want on your team. Employees play a huge role in how successful your son or daughter will be. Without their support, long days are ahead.
Finally, I highly recommend that you stay close to the company for awhile, even after another has assumed the role. You will be the buffer in times of trouble and the senior voice of reason. Keep your ability to vote alive for a period of time--as determined by you. And be willing to change your mind if your instincts tell you that it won't work.
Robert L. Wallace is the founder of EntreTeach LLC, a new Web portal designed to foster the development of minority and women entrepreneurs. He is also the founder and chairman of The BiTH Group Inc., an IT consulting firm that provides services in management consulting, telecommunications, PC support and integration, and document imaging services.
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.