Preparing Your Heir to Take Over the Family Construction Business
It’s wise to start planning early if you want your children to take over the family business. Here are some tips that will make a difficult transition easier
Statistics show that more than two thirds of family businesses don’t survive the transfer to the second generation. In light of this alarming figure, how can business owners prepare their heir(s) to take over the company? And how can you know when they are ready to step into that leadership role?
Every family has its own unique personalities and challenges, but that doesn’t mean you have to let the cards fall where they will when it comes to your successor. If you want to be a successful multigenerational business, start preparing now to create your transition plan. Here are a few steps you can take that will get you closer to success.
Let them learn valuable skills from other companies
If your heir(s) are young, it’s a good idea to encourage them to pursue jobs at other companies, particularly if they are fresh out of high school or college. If their only work exposure is directly underneath you, they run the risk of developing an entitlement mindset.
Have them experience working outside the family under leadership that will not show them familial partiality. It also helps grow their confidence and leadership skills – their success is entirely their own. This will also add credibility to their leadership when they come over to your company. There will be no question about the competency and skill of any child who has built a record of accolades and accomplishments from independent work experience.
Engage them in your business’s inner workings
It’s never too early to begin training your heir in the company. Whether they are working for you or someone else, you can still engage them with your work. If they aren’t yet on your payroll, perhaps you can let them sit in on important meetings and see how you conduct business.
This observation will help them immensely, as over time they will see and experience how you run the company, and how your team responds to your leadership. They’ll understand the culture and practices of your company, and that is a powerful lesson that can’t be taught by anything other than experience.
Don’t hand them the golden goose
When you’re ready to give your child a serious role within the company, it’s a good idea to develop a long-term plan for their growth through the ranks – starting toward the bottom. Don’t give your child an executive position right off the bat.
A lot of younger folks will want to start at the top of the pyramid without realizing they aren’t yet ready for that responsibility. In trying to help them succeed, you can actually be inadvertently setting them up for failure if you start them too high up the chain of command.
Give them a few years to work their way up through the company, perhaps allowing them to spend time in each department so they have an intimate knowledge of all branches of the business. For example, your child might start out in purchasing, negotiating with suppliers. Then they could move to marketing or sales, where they work one-on-one with clients and leads. Finally, they can work closely with engineering and the executive departments to learn the inner workings of the company’s leadership.
This will give them a well-rounded understanding of how the company runs, what it’s needs are, and why things are done the way they are. It also gives them the opportunity to identify ways they can improve the company’s vision, policies, and procedures.
Give them mentors aside from yourself
You will undoubtedly pass on your wisdom and experience to your child, but for a successful transition, they will need mentors and guides that can help them move forward. After all, the goal isn’t just for them to follow in your footsteps – it’s to carve their own path, and take the business further than you were able to.
If your child is successful, then the company can survive long after you are gone, as well as provide you with a residual income for the remainder of your life.
To help accomplish this, give your child the mentorship needed to take the company to the next level. They will need education from financial and legal advisors, accountants, and the like. It is also extremely beneficial to work with a family-friendly business coach to mediate all parties’ interests while helping to create and drive enterprise value before, during and after the transition.
Passing the torch
In the end, what enabled you to build a prosperous business won’t be enough in and of itself to ensure your heir’s success moving forward. It is essential that you prepare your child to take over and direct the company with their own vision and passion – growing the business to new heights.
It’s always difficult to pass the torch, particularly if you’ve spent your life building a business that you’re proud of. If you’re looking for an experienced mentor to guide you using proven solutions to almost every business challenge and opportunity imaginable, and someone who can support your growing company – we’re the coach you want.
Goldhill Group has helped coach hundreds of companies to grow cash flow, increase profits, maximize teams, and build focus, engagement, and satisfaction for owners, leaders, and their workers. Contact us today to book your complimentary strategy session.