During my first meeting with a client, he pointed to a picture of his two sons on his desk. The boys in the picture were 7 and 8 years old and both were wearing golden paper crowns. He said, “That’s my problem today, they both work in my business and both still want to be the one who wears the crown!

He went on to say, “Neither one is willing to work for the other and this has caused lots of sibling rivalry.” His wife then said, “If this doesn’t stop, we’ll sell the business before we let it destroy our family!” The owner voiced his agreement with that sentiment and explained how they had experienced tremendous family trauma with his father so they were not going to let this happen again. My partners and I have heard similar stories from clients over and over again, but when it comes to the decision to actually sell, this is often hard to do, especially when most owners enjoy their business. So, usually they do nothing, hoping this problem will resolve itself somehow.

Another client told me, “I’ve got a real problem – I have three sons and in a business there can only be one boss. I’m going to have to make a decision and when I do, two will be angry!” He was voicing his version of the proverbial family business problem of choosing your successor. He obviously cares about all of his children, yet he doesn’t want to make a decision that will jeopardize the future success of his business. For many business owners in this situation, choosing a successor is further complicated if their spouses may differently than they do. The spouse may focus on what the impact will be on the family while the owner focuses more on the business impact. Not knowing what to do and reluctant to open a can of worms that may harm family relationships and negatively impact the business, the owner usually does nothing, hoping the problem will solve work itself out somehow.

In a third situation, the auto dealer client had one child who was highly qualified to be the successor and another child who didn’t have the experience and skill, but was passionate about wanting to become the successor. The dealer said, “There is no way these two could work together so I’ll probably give two of my stores to each of them.” Obviously this solves the problem of them working together, but it may also be setting the one child up for future failure, if he is not able to run the dealerships. Again, Dad loves his children and wants to help both of them, but is conflicted on how he can resolve this issue so that his family is not damaged and neither is his business.

So, how do you choose your successor without destroying your family?? In each of the situations described above, the client was focusing on the end result and trying to make the decision BEFORE their child was ready. The most important question is: “If something happened to you today, is your son or daughter capable of running the company today?” No one should be designated as your successor until they are ready and capable. In each of these situations, since none of the next generation children were ready, I said, “Put that decision on the back burner and focus everyone’s attention on getting your children prepared so all of your children will be successful.

One of the children described in these scenarios asked, “Have you ever seen siblings able to run a company successfully together?” My response was a resounding “YES!” But for this to work, both siblings have to be committed, willing to work hard, willing to work at communicating effectively with each other; respect and affirm each other’s contributions and differences and not keep score. The fact is that most siblings have skill sets that complement each other and in order to be successful they will need someone like their sibling. Therefore, if they can settle the family issues, this type of partnership can be enormously successful.

This won’t work for everyone. It would be the wrong move to put some siblings together. When this is the case, owners often begin to look for opportunities to split the business or add an additional business to provide for each of their children. But unless you have determined that each of your children is committed and capable, then focusing on how to give both children a crown is putting the cart before the horse. Placing your child(ren) in situations in which they will ultimately fail is not the solution.

When dealing with family it is easy to let your natural desire to provide for your children overwhelm your business understanding of what is needed to be successful. The last few years should remind us how uncertain the economy is and how easy it is to become a casualty if we don’t have the capability to survive in a tough market. Therefore, the most important issue to answer is whether your son or daughter is ready, willing and able and that he/she has EARNED the right to wear the crown.

For more information on this topic, please email Hugh Roberts,  hbroberts@rawlsgroup.com.