Navigate Succession By Preparing The Next Generation

This article was originally featured in Forbes.

Most entrepreneurs are skilled at putting themselves in the shoes of others—their customers, their competition, a key vendor or an employee. We play mental chess, anticipate the reactions of others and analyze problems from different points of view. But we struggle with perspective when the matters are closer to home.

As entrepreneurs, we can be surprisingly limited in our ability to see our businesses through the eyes of our successors—those tasked with carrying our legacy into the future. As a father and grandfather, I recognize it’s a natural blind spot for all parents, and as a wealth advisor for more than four decades, I’ve observed this most in families looking to incorporate their children in the family business or trade.

Over the years I have counseled many families who are creating a succession plan for their business. In this article, I will share a few strategies leaders can take with their children to prepare them for succession and what can be done if they choose a different path.

Beware of the cloning trap.

Many business leaders, particularly those with significant wealth or business interests at stake, fall into the trap of viewing their children as extensions of themselves. I recently celebrated the 50th anniversary of becoming an Eagle Scout; my own son had very little interest in this. Navigating that experience helped me know my son—and myself—better, as I recognized all the ways in which he was becoming his own person.

We can bring our kids into the conversation and expose them to the family business without pressuring them to follow in our footsteps in a few key ways:

• Make them privy to key meetings or milestone events, without setting conditions on their participation.

• Urge them to gain experience by working outside the family business. They’ll likely garner more respect from co-workers and learn valuable skills.

• Expose them to different areas of the company so they gain a broad perspective of how it operates. They may well find a particular area of the company that excites them more than leadership.

• Encourage them to work their way up from the bottom. Starting by sweeping the shop floor, loading boxes at the dock or riding with a driver out for deliveries can build character and teach servant leadership.

As your kids grow into young adults, you can increase their exposure to your business to give them the chance to explore their interests and passions in and outside of the family, so that when the time comes, they—and you—are prepared for their decision to enter the business or not.

Prioritize financial education and work experience.

Many wealth creators assume that by merely exposing the next generation to family meetings or bringing them to work on occasion, kids will pick up on the essentials. Some assume that if they are good with numbers or business, that kids and grandkids will “have it in their genes.” But that’s just not how it works.

A strong business education will give you and your successors a shared language for discussing the family business. It can make for more respectful and productive conversations about your vision and legacy.

Give children repeated hands-on opportunities to learn about managing money. Encouraging them to experience the value of work and earning their own money. Managing a budget they are handed is one skill; earning money through work is truly a gift that keeps on giving. When my father and I started our entrepreneurial journey together, I had worked (and saved) on my own for seven years prior. I brought that experience and investment to the partnership, putting us on a different footing than what might have transpired had I been younger, less experienced and dependent on his investment. As a result, our business was a true partnership, and we mentored one another towards greater success.

Model the communication you want to have with your kids.

Money, business and family dynamics can be tough to discuss in even the most open families. Conversations about wealth transfer bring up so many things: Our own mortality, how we measure success and how we value one another. But these conversations also present opportunities for us to embrace transparency and to be more vulnerable, which ultimately bonds us to one another. When you open and lead the dialogue with your spouse and the next generation about what you envision for your business and your legacy, you create clarity that makes it more likely that your children will respond with their own openness and vulnerability.

Conclusion

Opening ourselves up to the next generation isn’t a one-way street; it’s also an opportunity for us to grow as we learn from our successors and their peers about the world today.

There’s always the chance that your kids may not want to follow in your footsteps. This is when you want to keep the bigger picture of your business in mind. What does it look like if your children follow their own path? You’ll need to rethink your succession plan and business ownership with this different future in mind. Bringing your advisors—financial, legal, estate planning and others—into the conversation will benefit from well-rounded input. Maybe your child or children will have different gifts and contribute to the business in another way. My own story has evolved with my daughter joining me at my company, but as a client experience leader rather than a wealth manager.

A growth mindset is essential, not only when thinking about your business, but for yourself and for those who depend on you. When you do this in the service of your legacy, the benefits can be as enduring as your vision for the future.

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