Small business is what drives our economy; two-thirds of new jobs are created by small businesses, and almost 50% of the US gross domestic product comes from family-owned businesses. Small business is so important that President Obama recently proclaimed this week National Small Business Week.
If you own a small business, it is likely you are hoping to pass the baton on to one or more of your children one day. After all, you have spent so much time and effort on your business, it may be hard imagining it not lasting into the future.
It may be hard to envision your children as business tycoons when they are small, but it can happen if you plan for it. Here are some tips:
Start them out young. Start exposing your kids to the family business early, and talk to them about what you do and why you love it. Remember that kids model your attitudes – if you complain about the business every day, they probably won’t want to go down that path; if you have a positive mindset, they are more likely to want to be a part of the action.
Let them fly elsewhere first. Everybody needs the confidence that comes from knowing they can succeed on their own. If you don’t give your kids that opportunity and they think they are just working in a company because a parent owns it, they will not have the self-confidence they need to succeed in the long run. Your business can also benefit from the valuable experience your kids gain elsewhere once they eventually join you. Once your child graduates from college, they should go work somewhere else for a few years, and earn a spot in your company as though they were not family.
Don’t hand over the reins all at once. When your child joins your company, they need to start where you did – at the beginning. Your expectations for them may be higher, but they can’t learn your business inside-out without first paying some dues. It’s a good idea to have them report to someone other than you, then stand back and be a mentor, not a parent or a boss. Move them along slowly and give them the chance become known with your customer base so your customers will be comfortable when the time for transition comes around. To cut down on resentment among other employees, be sure to make it clear as early as possible that your child is being groomed to take over someday.
Tailor to their skills. If you have more than one child who is interested in working for your family business, they probably have different skill sets. Parents often want to treat their kids equally, but that doesn’t work well in business. One child may be better with customers and one may have leadership talents. Just like every non-family employee is a unique fit for their role in the company, every child is different – let their skills and interests guide you.
Start planning early. A business planning attorney can help you formulate a succession plan that will ensure continuity for the business when it’s time for you to step aside. Your business succession plan needs to align with the goals of your estate plan to protect your assets and provide for your family.
Our successful work with family business owners is based on a simple concept: we treat our clients like family. Most of our clients are in business out of love for their families, and we believe it’s critical to not only take care of your immediate business needs, but also to help you look to the future to ensure your life and business leave a legacy of care and love.
To learn more about our personal approach to business succession planning, call us today at (612) 206-3701 or fill in our contact form to schedule a small business consultation session.
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