Passing Down Your Family Business – 6 Essentials (5 of 6)

Previous … 4. Separate Family Dynamics
5. Preempt the ‘Entitlement’ Factor (if applicable)

Who is going to work harder at making a business successful – someone who has just committed to spend several million dollars to buy it, or someone it was handed to? We’ve all heard stories of businesses being passed down within the family, only to die a slow death under mismanagement or inattention. While the deaths may not be solely attributed to ‘entitlement’, it is human nature to work harder at something we have a vested interest in or have worked hard for, than something that has been handed to us. Find a way for Chris to be accountable and/or have a vested interest in success of the business. After all, that’s how you got started.

The opportunity exists to reduce entitlement early-on by setting culture through other suggestions in this article – objectively assess Chris’ skillset and passion for the business (ie. would you hire Chris as an outside candidate); be objective in assessing work performance and in delegating more responsibility and authority as abilities are shown; manage and run the business as a complete & separate entity from family as much as practical; and even be objective about whether to sell or pass on the business. A side benefit often noticed is the added respect from, and sometimes retention of, non-family employees in the business who have seen Chris “earn his way”.

Possible initiatives to mitigate your risk…

  • Manage the pass down transaction and process as you would an independent sale of the business.
  • Ensure best practise business processes and maintain objectivity of business operations from family influences as much as practical.
  • If employees feel that your successor has legitimately “earned the right” to lead (independent of family relationship), his/her credibility and leadership will be established from the get-go.

Next … 6. Position the Business for Continued Success and Growth …

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About Doug Osborne

Doug Osborne is creator of The Success Dashboard Execution Platform© - a simple, practical and visual subscription-based online execution platform that is proven to accelerate business execution and performance for business owners and leaders, literally within hours. With over 35 years business success, Doug is an experienced business coach, speaker, writer, and strategy facilitator working primarily with small and medium-sized family businesses on improved & sustained business execution for accelerated growth, improved performance, successful transition or higher-value sale.