A while back we invited you to slide into our DMs, and almost 300 of you wrote in with questions. We got some good ones, and we’re getting back to you here. This one’s from Paul in Minneapolis, Minnesota:
I’m on my third year at the family business, and my father wants to pass his responsibilities to me and retire. While the company is very solid financially, I’m at a loss for what the long-term plan can be and if I’m the right person to continue with the business. Any help for getting out of the rut and figuring out what to do with a successful 50-year-old business so that it continues thriving?
Paul, congrats to your family on the long-term financial success, and it’s a great sign that you’re looking ahead.
“In many cases family businesses last one generation, and then the likelihood that they continue to be successful in the second, third, and fourth generation decreases quite significantly,” says Jenifer Bartman, a business adviser and the author of Diffusing the Family Business Time Bomb.
We suggest seeking out a business adviser to help you strategize, but here are a few things to consider in the meantime:
- Ask questions about your market and industry: Position your company for continued success by looking at new market opportunities, suggests Bartman.
What are the trends you’re seeing? Who are your rivals? Who’s your target audience and what do they want? What do you need to do as a company to be competitive
Answering these questions can help jumpstart your long-term planning.
- Have a business plan: Things might feel less formal because Dad’s the boss, but it’s important for a family firm to have a clearly defined business plan, just like any other company.
Bartman recommends bringing in an independent business adviser to help you put together an investor-ready business plan. You’ll benefit from an adviser’s experience, perspective, and objectivity.
- Do you really want this job? Next-gen owners often take over family businesses out of a sense of duty, without fully considering whether the job is right for them.
Ask yourself why you’re taking the reins, and consider the skills needed to run your business. If you don’t think you’re the right fit to lead the company, is there another area within the business that you’d like to explore?
- What would the succession plan look like? When it comes to the transfer of responsibilities and power, it’s crucial to set expectations on both sides, Bartman says.
Would the handoff happen gradually, or all at once? Would your father move out of the picture completely or still be involved in some way once he retires?
Additionally, is he looking to sell the business to you? If so, what’s his proposed price, and does that reflect what the business is actually worth? It’s important to hire outside consultants to conduct a business valuation if a sale is part of the deal.
Bottom line: Assuming control of your family business can be tricky, so take time to ensure you’re the right person for the job and the role makes sense for you and your career goals. Fleshing out a forward-thinking business plan can help clarify whether taking over is the ideal future for you.