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Many private business owners build successful businesses and would like to have their children take over someday. Often this wish is never communicated to the children. In other situations, the children might be part of the business but not prepared to run it.
Arlene Aardvark owned a successful manufacturing company. She had two young children and wanted them to have the opportunity to join her business when they were old enough. She saw that many of her peers either couldn’t get their children to join the business or the children were not productive members of the business.
Setting Expectations
Arlene started thinking about her children joining the business at a good time in their lives. Many times the following happens with children who are considering joining their parent’s business:
• They are turned off by the business because of perceived problems in the business.
• They have not been prepared to run a business.
• They have not been told they are welcome in the business.
• They are allowed to enter the business without having success someplace else.
If your children are young, they know more about your business than you may think. They hear you talk about your business around the dinner table. Many times they only hear the negative things that happen. This can give them a false view of the business that is more negative than necessary. It’s important that you talk about the good things that happen in your business and let your children know that most of the time you enjoy what you do.
Young children love to go to work with their parents. As your children are growing, take them to work with you. Find age appropriate jobs for them to do in your business. You just might find that as they get older, they start to become valuable members of your business team.
As your children enter their teenage years, it’s important to let them know they will be welcome in the business. Many parents want to make sure they don’t force their children to join the business. We aren’t suggesting you talk about them having to come to work, just that you let your children know they would be welcome if they were interested.
Letting your children know they are welcome in the business is a good first step. At the same time you want to make sure you have rules for children joining the business. At a minimum, you will want your children to achieve a certain level of education, have experiences outside the business and achieved success in those outside jobs before entering the company.
We often suggest that our business owner Clients have a family constitution that governs children joining and working in the family business. Having a family constitution will force you to think deeply about what your expectations are for your children if they are willing and you decide to have them join your business.
Arlene had taken the advice that she heard. She talked with her children about her business in a positive manner, had them work there for spending money and set clear expectations for behavior as they got older. Her children are now young adults and are important, contributing members of her business. Arlene is thinking about retirement and is wondering what the next step is.
Arlene did a great job of getting her children ready to run her business. Now comes the real test, do they have the ability to actually run the business? Arlene needs to leave for extended periods of time so her children can be tested. If they are able to run the business in a manner Arlene is comfortable with she can start making plans for them to take the business over.
Integrating your children in your business is challenging. It also has the opportunity to provide you with extra exit planning options. Having your children successfully take over your business can be very satisfying for you, their parent.
We at Stage 2 Planning Partners have some specific strategies and methods for helping integrate your children in your business. Please give us a call. We would love to review our programs with you.
If you would like more information or support from our firm, please visit us online or e-mail us and your Stage 2 Associate will get back to you.
With Warm Regards,
Stage 2 Planning Partners
Josh Patrick © 2006
Securities and Investment Advisory Services offered through NFP Securities, Inc., A Broker/Dealer, Member NASD/SIPC and a Federally Registered Investment Advisor.
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