Most family business owners dream of their children taking over the company and growing it to the next level.
Making that a reality, however, is not always possible. Acknowledging, facing and discussing challenges with your children can have long-term implications on the health of the business and the family. Here are a few of the issues that may arise when the children of a family business owner don’t necessarily want to follow in the parent’s footsteps.
“My career path has been chosen for me.” – Children start at about the age of 2 to push back against the wishes of their parents. While not all children will rebel against the idea of following the obvious path, many children will.
Individualism is important as a concept of youth, and perhaps even more in today’s society than in the past. “Being your own person” is seen as part of growing up.
For some, joining the family business may feel like an abdication of their independence. Others may see it as a blessing – having a career path readily available. The key for many families is to understand that both views can be valid.
It is important for the business leaders to allow the children to follow their interests, whether they are in the family business or not. At the end of the day, having an employee in the business, family member or otherwise, who doesn’t want to be there is a recipe for disaster.
“I want to experience something else first.” – Some children may want to explore options before deciding on the family business as their career choice. They may not be adamantly opposed to becoming part of the business eventually, but they aren’t sure.
There can be real advantages to allowing (or requiring) them to get experience elsewhere. It may allow them to bring new ideas into the family business, to forge relationships and connections that may be beneficial to the business in the future, and to gain a bit of freedom to make their own mistakes without being under the microscope of the family business. All of these can help them become more well-rounded contributors in the future.
“I don’t want the risk that comes with business ownership.” – Working in the family business is one thing. Taking on the responsibility that comes with ownership is something else. Not everyone is wired to be entrepreneurial, and that’s not a bad thing. Children in the family business should not be assumed to have the same tolerance for risk that their parents had.
Some studies have shown that the entrepreneurial spirit may skip a generation or two. Kids who have grown up watching their parents deal with the ups and downs of ownership may be put off by it. That can offer succession challenges for the family business.
Again, having someone take on the ownership of the business who doesn’t really want it can be disastrous. Family business owners should not assume the children will want the helm – and they should not judge too harshly if the children want a different experience than business ownership.
“I want to make it on my own.” – Having an entrepreneurial spirit doesn’t necessarily mean that children will want to apply it to the family business. For some, the thrill of starting something from scratch – taking the big leap – is exciting, and they want to experience that.
It may be that they someday will want to reconnect with the family business, or it may not. Family business owners can take pride in the idea that the children have seen something they want to emulate, rather than being distressed that the children aren’t following in their exact footsteps.
“I tried it, and now it’s time to go” – Many family business children begin working in the business at a very young age. They may start sweeping floors or delivering packages in their teens.
They may work at the company through high school and during summers in college. They may even join the company for a while after finishing their education.
However, the time may come when they decide that it really isn’t the place for them. Resigning from a family business can be stressful. They likely don’t want to alienate themselves from the family as a unit, and they may be afraid that they will be looked down on for leaving.
It’s important for the family members to be able to make these decisions without unnecessary fear. Maintaining a good family relationship is far more important than keeping someone in a business he or she has decided to leave. Business owners should foster the kind of relationship with their children that will allow them to speak frankly about their plans and desires. The family and the business will be better for it.
Keep lines of communication open with your children so that all parties can make good, informed decisions for the betterment of your business – and your family. – Denise Altman, CPA, M.B.A.
The technical information here is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation.
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