Starting, maintaining or growing a family business can be a point of pride for an individual. The company they run helps them support their family. It may also contribute to the local community by offering important goods and services and providing people with employment opportunities.
Many professionals running their own businesses want the company to continue even after they retire or die. It is common for business owners to want the company to pass down to the next generation of their family. Some people arrange for the transfer of their ownership interest to their children after their passing. Others may attempt to transition a child into a leadership position so that they can retire.
How can a parent prepare their adult child to take over the family business?
Allowing for long-term job shadowing
No amount of theoretical education can replace hands-on experience. The more technical a job is, the more important it becomes for a successor candidate to witness how someone else fulfills their job responsibilities. Arranging for a successor to observe the job for months as part of a hands-on training program is often one of the most effective means of preparing them to take over company operations.
Establishing educational requirements
Depending on what a business does, there may be certain formal educational requirements necessary for someone planning to run the business in the future. From certification with certain software programs to training regarding specialized equipment in a manufacturing facility, there may be formal education that a had an adult child needs to complete if they want to perform their job well. Determining what those educational requirements are and arranging to have an adult child undergo that education as soon as possible can help prepare them to take over the business.
Providing lengthy transitional support
Even after an adult child has learned by shadowing their parent and completing specific courses, issues may arise that they find difficult to manage. It is often beneficial for the parent planning to retire to continue working at the company after their child takes over their role. They can provide full-time support initially and then slowly taper off to just a few hours a week. Later, they might provide on-call support as necessary in unexpected situations. Planning carefully to allow an adult child to learn about their new position can take much of the risk out of the transition to new leadership at the company. Hands-on training and support can be just as valuable as a written succession plan.
Business owners hoping to avoid accusations of nepotism need to ensure that the child they want to take over their position is capable of doing so and willing to accept the role. Business owners who are pragmatic in their approach to the transition of power can help to preserve the organization that they have run for years.