Yes! And sometimes, no. The question of whether you should pass on your business to the next generation is a complex one. I’ve worked with many clients who hand over their businesses and it’s never simple although it can be enormously rewarding. If you like the idea of an inter-generational business, first ask yourself these questions:
1. Does one of your children actually want to run your business?
You might run a brilliant, profitable business with potential for growth – you’ve done everything right. That doesn’t mean your kids share your passion or vision. If they want to follow their own path, trying to shoehorn them into your business won’t work. Even if you and I both know your son or daughter would be better off running your fantastic business than pursuing their dream of becoming a magician, there’s no point ruining your relationship by forcing the issue.
2. Do you have a way to fairly split the business between your children?
Unless you have only one child, you need to ensure you’re apportioning the business fairly. You could split the shares up between your kids and if one will be running the business day-to-day, that child can be paid a salary. Alternatively, you can have the business valued and that can help one child buy out the others. If more than one child wants to take over the business, can they work together?
3. Are they ready to take over?
Does your child have the skills to run your business? Do they understand how to keep the cash flowing and the customers happy? If they need more experience, or more time working in the business, make sure they have it. One major advantage of a family handover is that you can do a gradual transition of responsibility. If your child genuinely doesn’t have the skills to do the job, maybe you could hire a general manager until they get the experience they need. Do what you can to set them up well; it would be awful if they tried their best but the business failed – both you and your child could be extremely upset and it might damage your relationship.
4. Are you ready to let go?
There’s a fine balance between helping your child handle the business and not being able to let go. What will you do next? If you’re going to try to resist any changes and micromanage the business from home, you’d be best to hold onto the business a bit longer or sell it to someone else so you can let it go.
5. Do you have a clear and organised succession plan?
By putting a plan in place, you can avoid a lot of the problems that crop up when you start transitioning ownership to your son or daughter. I can help you create a schedule for a gradual handover, helping you have a clear timeline so you can move onto your next adventure.