The Family Business Helper Part 1

As a consultant and business owner, I have been in 12 family owned business in one capacity or another-23 different assignments. In that time, I have seen good ones, bad ones, successful ones, unsuccessful ones, well run and poorly run, profitable and unprofitable, those that keep up with the times and those that do not and, unfortunately, most of all....... businesses that were fairly well run and profitable turned over to the kids only to be run right into the ground. Some times I have come in to save them, some times to reorganize them and sometimes to put them in bankruptcy and see what could be salvaged (have actually salvaged the entire business on occasion).

So here is my advice if you have a family business:
1. If you have a successor, decide who that is right now. If you do not, see #7 below.
2. Begin training that person to replace you right now.
3. Make that person work every function in the company until they realize that it takes all the functions in the company to make it work. Pay them like everyone else in those categories. If they need special treatment or arrangements, do that only if you have to and do confidentially even if you have to do it personally.
4. Make sure, no matter what, they get sales experience and know the difference between sales and marketing. Even if they are not sales people, make them do it, make them "carry the bag" if you will. It would be great if they had to make cold calls and travel.
5. When the time is right (I will describe that later) give them a title that lets everyone know they are the heir apparent. Not such a large title that they cannot be promoted through a series of events, but something significant.
6. Progressively increase their responsibility until you name them President and COO. You remain Chairman and CEO until you retire. When you do this, be there to help not direct and let them lead no matter how hard it is.
7. If you do not have a relative that is going to take over, begin looking for your heir at least 5 years before you are going to retire. It might take more than one to work out. Family owned businesses have their own idiosyncrasies usually some of which are not normal business methodology so be ready to change.

So lets elaborate on #1. If you have kids in the business and you want one of them to take over (they cannot all take over) make sure that they REALLY want to stay in the business. Do not ASSUME that they all want to be in the business. All of Warren Buffets children could have been in the business I suppose, but only one is. If there is more than one, without regard for age/education, pick the one who works best with your people after you have seen them all in action. If you only have one child and he or she wants to be in the business, get them a great education (as far as they can go) and begin training them right now. Let them work summers, Christmas holidays, etc. Then start them out learning the product/service and work their way up through all facets of the business. If you are 20 years from retirement, it is not too early to start.

Next make a plan for the heir apparent to assume the throne (the job not the executive bathroom LOL). Identifying the person becomes the easy part, training them according to a plan may be tougher, but in my experience the single biggest reason children assuming the helm of a company is that they were not properly trained and the owner/founder/parent was so busy running the business the way they always have that when they were ready to back off/retire the kids were not ready to take over. Most of the businesses that the kids ended up running into the ground were because they did not know the intricacies of running the business that the owner held dear and did not pass on OR the business needed so much upgrading that by the time the kids tried it was too late. Even more common was the kid had be coddled through the business and put in charge right away. They were GIVEN EVERYTHING and then GIVEN the business and they had no idea of the fiscal responsibilities of the business.

So choose early, train properly, treat them like employees at first and then as owners and then get out of the way!

What do you think?