Now that people are living longer, healthier lives, they are no longer willing to give up the reins of the family business sometimes even into their 80’s. That puts the next generation into their 50’s and 60’s. How do they plan for their retirement?
Jeff and his sister want to take over the family business from mom & dad who are in their 70’s. Mom & dad show no signs of letting go. Jeff is in his 50’s and wants to move the business along into the 21st century, increase revenues and provide for his own future. So, how does he fire mom & dad?
Jeff is sensitive to the fact that his parents founded the business and are just as emotionally attached to it as they are
financially. They never set money aside for retirement and even though they take 8 weeks off in the winter to warmer climates, they still run the show from southern latitudes. Jeff feels like he can never assume full control. His sister is marginally interested in the future but deep down expects Jeff to take care of that. Another brother who is not involved with the business lives on the west coast.
This scenario plays itself out too often. There have been few to no conversations about the ‘when mom & dad get older’; they’ve never initiated the conversation because they are living day to day until some outside force imposes a change. Many times, the younger generation doesn’t want to offend the parents and create a morbid discussion about “when you die”. So it is left untouched until it is too late. What is the best option in these cases?
It’s time for a talk around the campfire. A skilled business coach with the gift of sensitivity can bring this discussion to light with the entire family involved. In the scenario above, all members of the family, even the one not involved in the business, must participate in the conversation. After all, he is set to inherit a part of the net worth even if the other two siblings buy the business. ‘Ouch!’ Really? He’s ever done anything for the business. But, he is an equal sibling. You may think he deserves none of it, but he thinks differently. It may not be an equal share, but it’s still a share.
If this is being handled when it’s too late (death of a parent or both), this can get ugly. But if it is handled while they are still around, they can have input. The screaming can happen before the will is executed instead of after and normally it is split on a more even keel. There’s something about the parents not being around that elevates the conversation and settlement to an ugly level.
When the succession planning is done ahead with a third party leading the discussion, it is easier to discuss with a business consultant in the room. A good business consultant will regulate the conversation and bring the greed and control levers to a neutral position with thoughtfulness. All parties need to benefit in some form. Telling your parents that it is “time to step aside and let us take over” is usually realized by parents during the course of the conversations, making the end result easier.
So don’t wait until it’s too late. Find someone with the gift of compassion and start thinking of this 5 years ahead, make that 10 years ahead. Begin preparing the business for the change and for mom & dad to step aside. They’ll feel respected and appreciated for how it was done and will be prepared to make the move much easier.
Leading Edge Business Strategies, LLC is a consulting firm for small business. Paul Beaudette is the President and has over 30 years of successful business experience leading companies to sustainable profits, new growth strategies and business sustainability.