Every employer knows that different employees have different strengths and weaknesses. Likewise, most parents will concede that each of their children have different strengths and weaknesses. Successful employers look for an employee’s strengths and weaknesses and match the employee’s strengths to the needs of the company. Conversely, if you take that same employer and place him in a parental role, s/he is often tempted to try and mold their children to meet the needs of the company, or (possibly worse) give each their children an equal right to control the family business in order to be “fair”.
To be sure, equal control is the correct choice under the right circumstances. But often times, families have a child that is interested and capable of running the business and other children that are only interest in the benefits of equity ownership. As we discussed previously, research shows that only 30% of family owned businesses survive beyond the first generation. One reason for such a high failure rate is mismanagement (or apathy) from children that were never interested in running the business.
Alternatively, a parent can take an active role in piloting their family (and business) through the difficulty of losing their proverbial “chief executive” by (1) make an honest assessment of your children’s skills, interests and weaknesses, (2) engaging qualified professionals to help craft a succession plan that navigates the benefits and risks identified in your assessment, and (3) discussing your plan with your children to provide them with an opportunity to provide valued input and develop buy-in from the next generation.
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