by Tom Crouser
Once a business is organized around functions, one may logically train a successor. How this is done is important. It first starts with understanding career “tracks” within the business for being a member of the “lucky gene pool” isn’t enough to qualify someone to take over the business. Once understood, the “executive track” may be created which is the successor’s training plan.
High School Track
Our kinds of businesses are more like the family-farm of old. The farm family lived on what was left over, not by pledging future earnings. The farm family knew to maintain strength for next year’s crops weren’t guaranteed. And, most importantly to our discussion, the farm family demanded everyone do their chores regardless of age. Same should be said of us.
It is important for stakeholders, especially unemancipated children, to pay homage to the source of the family’s income whether it is the family farm or your business. On the farm the kids brought in the cows, hoed the corn and slopped the hogs. In our business, the kids should sweep the floors; do handwork and/or any other “chore” that suits their age or talent.
You want them to do this for two reasons. One, you want them to understand the business of the business. You want them to appreciate the work Pop and/or Mom does on a daily basis to feed, clothe and school them.
Do you pay them? Did your ancestors pay for work done by the children on their family farm? Of course you don’t pay them. They are indentured servants in the good sense of the concept. They are learning a real work ethic. Okay, in these days of the kids being able to get a job at McDonald’s and earn some spending money; I’d cave on the absolute rule that there should be no pay. However, if they aren’t old enough to get a real job; then they aren’t old enough to get paid in your shop. An underwhelming allowance will suffice.
By the way, they should be taught to appreciate the people who are workers in the business. These are the workers who are really making the money for the family. In fact, when possible, they should be supervised by someone else in the shop and that person should be trusted enough to cut them no slack. I’m not talking about bringing kids into the shop for pretend jobs and paying a lot of money for nothing work. I’m talking about having them clean the latrines under the watchful eye of a trusted drill sergeant. I’m talking about them being seen by other workers as contributors not loafers.
Besides that, my point is participating in and completing the high school track does not qualify them to be a successor. It is a step, but it is a step that all of the children should go through. After all, they’re living off the family farm. Besides instilling a real work ethic in them will tend to prevent them from growing up as spoiled darlings. I could write a book about that as well.
Daughter or Son-In-Law Track
You need a receptionist. Your daughter-in-law is available and could do a good job. You need a basic laborer. Your son-in-law has been laid off and would like a shot. For gosh sakes, hire them as long as they are at least as adequate as any other worker. Don’t hire them if they are inferior (there are tests that tell you such things – lemme know if you wish more info.) And they may work for your for twenty years.
But this does not mean they are qualified to take over the business.
Rather, this means they are loyal workers just as the non-related workers who have worked for you for twenty-years are and should be rewarded as such.
One owner was the first to come to the US. He later brought over his father and then, his brother. They spoke little English. In their culture, the family-members are obligated to supervise non-family members. So, the brother who was hired to do basic bindery tasks began “looking over” the press operator’s work even though he knew nothing about it. He assumed authority he didn’t have. Imagine how happy you would be as the press operator.
It’s great that we can work with members of our family. But in the family-based business, we family members have no more authority than our position affords. This is particularly true with husbands and wives who try to co-manage a business without clear definition of who reports to whom.
Successor’s Executive Track
The executive track is what the proposed successor should be place upon. And please understand there is no guarantee that the successor will complete it.
Parents intuitively try to treat children “fairly.” Unfortunately, they often interpret fairness to mean equal and divide the family business equally. That’s unfortunately as it most often sets up a fight resulting in people never speaking to each other again.
Fairness is equableness of opportunity; not equableness of assets. Afford all siblings the opportunity to participate in the executive track and then select your successor from those completing it. Most often, only one will.
What is the executive track? We begin detailing it in our next edition for the Executive Track is truly the training program for the successor.
Considering transitioning to son/daughter or employee?
Our CPrint program has helped many prepare successors for business over the years. Let us learn more about your situation as you learn about our program in a no-cost or obligation online assessment meeting. Message me at email@example.com if you’d be interested.
Ready to sell?
We provide on-site valuations of businesses that include an estimate of value as well as include recommendations of “fixes” that will improve earnings and thus value if there are issues there. We also can provide a non-onsite arms’ length estimate of value for planning purposes for businesses if not in need of fixes. If you are ready, then email me at firstname.lastname@example.org and let’s see where you are.
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