One of the greatest challenges that the current generation of youth are facing is the failure by parents in business to inculcate their children into their businesses. These children are looking at all the wealth that their parents’ businesses generate, and they foresee a future where they are the CEOs and chairmen. This is despite the absence of a process where the parents take them in as protégé to know every element of the business. So we end up having children who are enjoying the fruit of their parents’ labors aiming one day to own the source of the wealth but having no access to how the source is managed until after their parents are dead. All of us in business or aspire to be in business need to know that our businesses must be generational; i.e. we can hand over to the next generation a skill, a business model or a capital base (social and/ or financial) for its continuity.
Why and how an inheriting generation sometimes drops the ball on their parents’ businesses
Lack of vision – Don’t kill the vision to retain sight. A certain man who rose to be a king would fight and plunder his enemies greatly. His intention was to accumulate enough to build a temple for GOD. On his death bed as king, he blessed his son to be king with an inheritance and he also shared with him the vision of building the temple. The son built and furnished the temple with all the gold and artefacts. A vision was passed and accomplished meticulously from father to son. How many parents have adequately shared their vision with their children? Family businesses must have a vision so that whatever any family member is doing will be governed by that vision. Vision is bigger than big business and a ton of money. Know your vision as a family and have every member articulate it in their own unique way.
Fear factor – It is as diverse as people. Fear that the children do not understand the business, fear that they will not fulfill your dream, fear of change, fear that the business is too big to be handled and fear of the unknown. Given that the fear cuts across the current owner and intended heirs, the best strategy over fear is a collaboration of efforts in conducting the business. Fear implies self-doubt and the inability to see another person as a human being who can make mistakes.
Saving face – If one went into most family businesses, there would be most likely no defined structures or professional way of running things. Financially, one would probably find embezzlement, and hidden skeletons that would break the family if discussed in a family gathering. An example could be a son going into the family business and finding out that his father goes on vacation every three months but every time he has explained those as business trips. So, if the current owners are doing some unscrupulous things, the last thing they need is to have their children in the business because they will lose face. So as not to be embarrassed they would rather die first before allowing their heirs into the business.
Lack of trust – Trust is about knowing that someone else will have your back at any one time. It can make or break your business especially if family members do not trust each other. It will cause family members to transact family business in the presence of lawyers when a family lunch of roast meat, mum’s favorite dish and children playing in the open grass would have sufficed.
Selfishness – The good old book known as the BIBLE has a statement. “Naked has one come into this world and naked shall they return, and they shall take nothing with them from their labor”. In family businesses a lot of the time there is this innate desire for the founders to want to keep it all to themselves, yet no one lives forever. It could also be that some siblings squabble for controlling shares or for all the good things leaving others with the not so good portion of inheritance.
People must realize that selfishness is subtractive in nature. Multiplication and addition of resources thrive in the absence of selfishness. This list is by no means exhaustive, but it begins to expose the root of failure for most family businesses. Having identified the problems, let us identify processes and models of addressing the situation that many find themselves in.
For those currently in the driver’s seat
Share your vision aiming for a lasting legacy – Take your children to the office with you. If they are age appropriate
let them work at the business in various capacities – janitors, photocopying, making and serving tea, closing a sale, counting stocks, planning an event, delivering goods to a customer, manning the phones. Let them come with you to a high-profile meeting to learn why and how you do the business.
The only way to leave a legacy is to let our children know why and how we are doing what we are doing and invite them to have a hand in it thus leaving their own mark. The man who built the ark knew and operated this principle and that is why his sons did not join the rest of the world in laughing at their father. Latter generations have the advantage of technology, skill, networks and infrastructure which if well blended into the business, a lasting legacy and generational wealth will be the markers of you having walked the earth.
Develop a connection with your children – It is disheartening to hear a parent say that they have toiled hard to build a business for their children and when they have grown up, they want nothing to do with that business. More often than not, a little digging into the history will reveal the issues we stated earlier expressed in parents’ absence during the developmental years of the child or a complete disconnect between parents and children. It also sometimes is expressed by children engaging in areas that are drawn far away from what their parents do.
Parents must make the effort to build that connection by spending time with the children in what they love doing. A parent whose child is interested child in corporate law of professional ballet dancing must make the effort to bond with the child at their level and find out any connection that may exist with the legacy being established.
Invest in process and people – While sometimes family may not be as committed to the cause as required, it stands true that in the absence of the founder, they will not let a good business fizzle out. That is why it is important to invest in people (employees) and process (building efficiency into the operations). Efficient & effective people and processes can take a business to greater heights and the business value is also increased.
For those seeking to inherit
Remain teachable – No matter how developed this world becomes, nobody can know everything. Even if one comes back from China with the latest manufacturing technology in the clothing industry, there is something to learn from how things were done before. It is within this human interaction that we learn some things that even Google, and Bing do not have an answer for. You can only appreciate the intricacies of the business when you interact with those who have been in it a while longer.
Aim to improve, not deplete – As one who is set to inherit a business, words like responsible and accountable should be second nature. Depletion is never obvious. It is only visible when one is gone so far down that the apex is further away than the bottom. As such, the attitude when one is going into a family business, should be “determination to improve the business” not “determination to enjoy now that the folks are out of the way.”
Show value for the foundations laid – I am yet to find a perfect replacement for respect of others and their work in business circles. Those who have gone ahead of us in business have made great strides which are the foundation of some of our success stories today. We must show regard for these and use them to go further than they have.
Confident to reinvent – Inherited businesses also have their faults and fault lines (areas that can be a source of trouble and instability). Reinvention allows those inheriting to deal with some of these issues. People take a step back to assess the direction of the business and chart a new and revitalized course to focus on what is best for the business. Reinvention means change and even though multiple heirs disagree on the reinvention, those who assume the leadership role, must guide all good decisions to have continued and permanent success for all the family amidst temporary and isolated resentment or permanent and deep sated resentment amid irreversible failed family business?
In context of the dynamic and variant businesses in our environments, the above is by no means exhaustive. One who is in a family business and is committed to making it generational needs to find what works for that particular business and apply it therein. There is no “one size fits all” kind of solution.
For more insights into business principles that will influence your profession, career, or work, we recommend the book “Family Businesses – The Essentials” By Peter Leach