family-business-succession-planning

“That was my dream – to have my kids join me in the family business, but now it feels more like a nightmare!” This sentiment is all too common among business owners who want to build a family business legacy through succession planning. Why does it work well for some families but not for others?

The Contradiction: Family vs. Business

The term “Family Business” is contradictory. Family is about unconditional acceptance, while business is about conditional performance. In my experience of over 50 years in succession planning with family businesses, most are imbalanced towards either family or business.

Family-Focused Imbalance: A Risky Approach

When family is the main focus, decisions are often made to make family members feel good, resulting in premature promotions, excessive pay, and cutting corners on training and time off. Unfortunately, this approach can hinder your child’s ability to earn respect, a critical element for business succession success.

Business-Focused Imbalance: Sacrificing Family for Success

On the other hand, when business is the primary focus, the family’s needs may be sacrificed for the sake of the business. This can lead to resentment among family members who feel neglected, often prompting children to distance themselves from the family business, putting business succession planning at risk.

Balancing Priorities

At The Rawls Group, we believe that “there is no business gain worth a family loss.” Money can always be made, but relationships are not easily repaired. While focusing more on family than business might seem ideal, structuring the development of successor children so that they have to earn their positions is crucial for successful succession.

The Challenge: Balancing Expectations

Why does a focus on a family challenge succession? The American parental dream is to give children a better life than their parents had, creating a disconnect when parents talk about the sacrifices made to build their businesses. Balancing the desire for success with family expectations is a delicate task.

The Balancing Act: Keys to Success

Balancing family and business can be challenging, but those who succeed have common strategies:

  • Prioritizing Family Time: Successful individuals prioritize and protect family time despite busy schedules.
  • Earning Their Place: Family members must earn their place in the family business, taking the stairs instead of the elevator to the top.
  • Clear Development Plans: A clear plan for developing children working in the business is communicated, outlining expectations and long-term goals.
  • Regular Business Updates: Business updates are regularly shared through a forum like the Family Business Council, allowing children to understand the business’s impact on the community.

Navigating Challenges: The Road to Success

Navigating the challenges of family and business is difficult but rewarding. Trusted advisors play a crucial role in defusing conflicts, clarifying issues, and guiding the way. Striking the balance that brings business success and family harmony is rare but incredibly valuable. One client said, “Watching my children succeed in my business is the greatest joy of my life!” That’s a goal worth pursuing.

How We Help You

Are you struggling to balance family dynamics and business success in your succession planning journey? You’re not alone. Many business owners face the challenge of harmonizing family relationships with the demands of running a successful business. At The Rawls Group, we understand the complexities involved in building a family business legacy while ensuring business continuity. Whether you’re navigating the challenges of premature promotions, sacrificing family needs for business success, or struggling to balance expectations, our experienced team is here to help.

Contact us today to schedule a consultation and explore how we can support your business journey. Gain valuable insights and actionable strategies to foster family harmony and business success. Together, we can empower your organization to thrive amidst uncertainty and pave the way for lasting success. Don’t let the dream of a successful family business become a nightmare. Reach out to us, and let’s work together to create a brighter future for your family and your business.

The article was originally published in Digital Dealer: Successfully Navigating the Landmines of Family & Business: The Keys to Exceptional Rewards.

For more insight:

Visit the “Strategic Considerations in Automotive Retail” discussion page or select one of the additional episodes of the series below:

Resources

  • The Presidio Group: an independent merchant banking firm focused on mergers and acquisitions, capital raising, and investments in the automotive retail and consumer mobility sectors.
  • Succession Readiness Survey:  A 7-minute investment in time will put you in an informed position of opportunities many business owners overlook, impacting business value, growth, and lifestyle, and ultimately achieving your vision.
  • Contact a Succession Planner: The Rawls Group can help you with insights and other resources and see if it makes sense to work together. At the very least, in 30 minutes, you may get some ideas you can apply to your business immediately.



Family Dynamics and Family Governance

Family and Business alignment is hard to find when business issues liven up family dynamics.

However; with proper process, governance policies, and mutual respect built over time, a Family Business can thrive through multiple generations. Click the following links for more drill-down resources on  Family Dynamics and Family Governance.

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We can provide insights and other resources and assess whether it makes sense to work together. In just 30 minutes, you may gain actionable ideas that you can immediately apply to your business. Contact us via phone or email below, or fill out the “Ask An Expert” form.