FAMILY SUCCESSION PLANNING: KEYSTO DOING IT RIGHT: Who gets to be in charge of the family business?

Author:Sniegolski, Terri
 
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The statistics involving the lifespan of a family business are kind of grim. While there are a lot of family businesses in the United States--5.5 million, per some accounts--they don't all stick around. According to Harvard Business Review, 70 percent of family businesses never become a business run by the second generation. Only 10 percent make it to a third generation.

So, what is that 10 percent's secret?

As a second generation-er helming a family business, I think I know. I'm the CEO of Creative Colors International, a national franchise that specializes in on-site restoration, cleaning, protection and dyeing of leather, vinyl, plastic and fabric. My parents, JoAnn and Jim Foster, started our company in 1980 as J&J Creative Colors, which was then solely an automobile upholstery repair business. Here are some of my theories on why some family businesses thrive.

The emphasis should be on the business, not the family.

Some parents want so badly to be able to pass on the business to their kids that they practically will it to happen. But many children don't want to follow in their parents' footsteps. They need to chart their own path, and your kids should be encouraged to do that.

Besides, if you really want your business to be your ever-lasting legacy, you should be considering who would be the best people to take over. That may be somebody else's children.

Your kids should earn the right to take over.

Even if you have an enthusiastic kid who loves the idea of taking over someday, your employees may not be as enthusiastic. If your kid leapfrogs over everybody else into a prominent position upon being hired, you're going to create a lot of hard feelings.

This is why everybody's going to be more supportive and have more confidence in the new leadership if your kids pay their dues first. They need to have some time doing grunt and mid-level work, getting as much experience working everywhere in the business as possible so they can really understand how to run the entire operation.

Your kids may not be on the same timeline you are.

When I first started working at my parents' business, I was way too young and inexperienced to have taken over--if somehow Mom and Dad had been foolish enough to ask. I was fresh out of high school and working for them became overwhelming, with the lines between family and work impossibly blurred. I saw my parents 24/7 and was thinking about work 24/7.

This is why I left and started working toward becoming a...

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