Racing Towards the Handoff: Part 1

By Andrew J. Birol, President, Birol Growth Consulting

Having served more than fifty client businesses led by parent/children teams, I regularly assist leadership in changing hands. In this first of three installments, I will outline what you, whether the owner or the inheritor, can do before the transition to prepare for your succession.

Face it, in your family business, all decisions, particularly those of succession, are likely made as much for family reasons as for business. When the inevitable time approaches for your next generation to replace who is in power, a collision of emotion, reality, expectations and aspirations is likely. Here are some examples I have witnessed:

  • Founding sisters, counting on cashing in on their firm's success to fund an unplanned retirement, learn that the recent economy has devastated their wealth. In panic, they plunder their company to salvage what they can.
  • A father hands off his business but with nothing to do, stays around, and second-guesses his offspring, plunging the company into indecision and decline.
  • A daughter realizing her vision for the business is irreconcilable with her father's, grows impatient, and walks out, leaving him high and dry.

Successful transitions start through preparation and communication. For your impending handoff to be flawless, both of you, the incoming and outgoing owners, need to:

  1. Reconcile your personal goals with your business' needs.
  2. Set, agree on and meet each other's expectations
  3. Do whatever it takes, not what is easy.

    There is an old adage, companies don't make decisions, people do, and in the case of your family business two emotionally, professionally and financially intertwined individuals have to act as one. Doing it right is tough and differs depending on which role you play.

    Getting ready when you are the leader

    • Reconcile your personal goals with your business' needs. Whether you are leaving the business in a state of survival, success, or significance, you have created an entity separate from you. Although you created your “business baby”, it, like your child, has grown up and must move on. Accept that your business and you will go your separate ways and make sure you have a separate way to go.
    • Set, agree on and meet each other's expectations. Don't just pick your successor; define what you need to hand over the reigns and when you intend to do so. Gaming your offspring with false hopes or unachievable goals is just as destructive as giving it all to them on a silver platter without any commitment in return.
    • Do whatever it takes, not what is easy. Growing a business is hard enough without transitioning it between loved ones. Understand that the needs of the business come first and as its leader don’t ever confuse what your business needs with who your children are. Just as you would when interviewing any employee, determine what your child can do, will do, and how they will do the job. Get outside help if your company's success requires it.

      Getting ready when you are the follower

    • Reconcile your personal goals with your business' needs. Whether you were preordained to take over the family business or you are the prodigal son pressed into service at the 11th hour, ask yourself why you are taking over the business. If you don’t want to grow it, don't take it over. You can get others to supplement your missing skills but no one can replace your empty passion. Too often, the next generation lives out a professional lifetime based on guilt, blind sacrifice, and fatalism. Don't become a walking stereotype; make a conscious decision to do what you want, regardless of your last name.
    • Set, agree on and meet each other's expectations. Taking over the family business does not have to be an all or nothing proposition. There are an infinite number of ways to structure responsibilities, timing, investment, and ownership. If you remember the business is not yours until you have earned it in the eyes of your parents, employees, customers and vendors, it will mean a lot more to you and you will take leading it a lot more seriously. If you and your parents cannot come to terms on expectations, then move on. You and the family business are not each other’s only game in town.
    • Do whatever it takes, not what is easy. You may share a last name with your parent's business but otherwise do you belong there? Understand your best and highest use® and objectively decide what you need to learn, endure, and accomplish to lead the business. After first working elsewhere, accept and accomplish company tasks that are not only critical but the ones that only an owner would care enough to complete.

    In addition to the leadership baton, remember that both of you are carrying your own backpacks of professional, financial, emotional and personal issues. Before you race into the fly zone and exchange control, ensure you are both buttoned down. The most successful parent-children owners have learned how to play and fight fair, and depend on communication, trust, and commitment to succeed.

    Over the next three issues, each phase of the business ownership relay race will be explored. Stay tuned!

    Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:

    © Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080 , by email at abirol@andybirol.com, or on the web at www.andybirol.com.


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