Dear Mr. Dad: I’m in my 60s and have been thinking about retiring from the small-ish company that my great-grandfather founded nearly 100 years (I’m the CEO). We made it through the COVID pandemic, and I’ve been thinking a lot about retiring and bringing my adult children in to learn the ropes. This isn’t exactly a parenting question, but I’m wondering whether you have any thoughts on the challenges that we all might face—especially how that might affect our relationships.
A: Congratulations to you and your business on surviving COVID—and to you on your upcoming transition. Since about 90 percent of businesses in this country are family owned or controlled (according to the US Census Bureau) it’s no small wonder that you’re thinking about having your children our child join—and eventually replace—you. Bringing them into the business can be a wonderful thing, making the family closer than ever. But it could just as easily be a disaster and end up destroying both the business and the family.
You described your company as “small-ish,” so one of the ﬁrst things you need to consider is whether the business can support another person at all. If it can’t, does bringing a child in mean you have to retire? Regardless of the size of the business, it’s essential that everyone involved agrees on what’s expected. Are you planning to stay on, and if so, in what capacity? Will your children start in the mailroom and work their way up, or will they start at the top or somewhere in the middle? Will they need any specialized education or training?
A business should be run like a business, not like a family. That doesn’t mean you manage the company like a tyrant, ignoring everyone else’s input. But at some point, decisions have to be made, and you (if you’re running the show) have to make them, which means everyone—including your children—has to respect your authority. The fact that a child may be sporting a brand-new MBA and has some great ideas about how to run things doesn’t necessarily offset your decades of real-world experience.
Keep in mind that having your children join the firm will probably have an impact on any employees you might have. Adding another family member, particularly one who comes in at the top of the organizational chart, adds a layer of bureaucracy that could bog down decision making and the flow of information. In addition, your children are going to have to earn everyone else’s respect—some long-term employees may resent taking orders from a young whippersnapper. So before you hand over the keys and give your kids corner offices, make sure they’ve got the practical and interpersonal skills to do the job.
Finally, spend some time thinking about how you’re going to resolve two common conflicts. First, two siblings may fight over the same position, or none of your children may want to go into the business at all. Only between a third and half of family businesses survive into the next generation (your company has obviously defied the odds so far, but, as they say, past performance doesn’t necessarily predict future results. Some go under because of financial pressures, some because the owner’s kids have no interest in taking over, and some because the family members can’t resolve their squabbles. Second, what happens if one or more of your children pressure you to retire sooner than you want to? You may resent their lack of confidence in your ability to take care of yourself and run the business, or (what you might perceive to be) an attitude of caring more about your money than about you.