Communication, No Assumptions Key to Succession Planning

Since our daughters are not quite ready for owning part of the family business, I was referred to a friend and fellow ABI member, Molly Varangkounh, whose family is further along in the process of transitioning ownership in their family business (Hy-Capacity Tractor Parts in Humboldt, Iowa). Molly’s interview is paraphrased with some examples in the following bullet points.

The key factors revolve around communication and not assuming.

• Communication should start early and stay open for the best outcome.
• There is or can be a variance in how different generations think; be sure the next generation wants to own the business.
• Is the next generation ready to own or carry on? Do they have the business skills, knowledge and leadership acumen?
• If they do want to continue the family business, are there any non-negotiables from the older generation on what the future holds? How much involvement is expected from the retiring owner, or will the owner be hands-off?
• Is that non-negotiable worth not having a family member as part of the future of the business?
• Make sure you are open to listening to what the next generation’s ideas are for the business. Don’t criticize but problem-solve to get a better understanding for both parties.
• Make rules early and before emotion can affect the outcome. For example: Will nonrelatives be allowed to be owners? Does that include spouses of direct family members?
• Make the expectations of children coming into the business known, whether it is education requirements, outside experience, special skills, leadership training, etc.

I think the start of any conversation in passing on the business to the next generation starts early by exposing children to what your business involves. Let them witness as much as they can while maintaining a solid work-life balance. As they mature into high school and college age, let them know that the possibility exists if they would ever desire to join the family business. Then wait and see what happens as they decide on career paths and continued education. All good things come to those who are patient.