You've built an IT services business. Your kids are now involved in the company. But will they ever be ready to run -- and own -- the business? I suspect thousands -- yes, thousands -- of IT service providers will face that question over the next decade.
We've checked in with several family owned businesses since launching ChannelE2E. Companies like Directive (owned by the Chase family) and CCB Technology (owned by the Booth family) come to mind. In both cases, the founders allow family members to earn more responsibilities -- but big titles and eventual company ownership aren't a birthright. Like I said, family members -- like the employees around them -- have to earn their way up the corporate ranks.
Still, plenty of business owners struggle when they attempt to manage and/or groom family members who work for the business. More than 70 percent of all businesses in the United States are family businesses. However, two out of three don’t survive to the next generation, according to Family Business USA President Henry Hutcheson.
“There are a number of sound practices while sustaining a family business,” Hutcheson recently wrote. “But there’s a big difference between working with your children and lining up your succession plan with your kids in mind.”
Mentoring the Next Generation of Leadership
Building on that train of thought, Hutcheson -- who also authored “Dirty Little Secrets of Family Business” offers three tips to help businesses groom the next generation of family owned leadership. His tips include:
- Identify your children’s individual strengths. It’s impossible for your son or daughter to think and act exactly like you. If you’re the founder of the business, this may be even more difficult to keep in mind because you started a business from scratch. Your children may not have the same entrepreneurial spirit. That’s perfectly okay, because your business is in a different stage from when you started it. While experience has given you a large bank of knowledge, allow your successor to shine and contribute at their pace. Guide them gently; they will want to do some things their own way. Let them know when they’ve done something exceptional, especially if you wouldn’t have thought of it.
- Expose your children to all aspects of the job. Merchandising, production, management, buying, marketing, financial planning – the list goes on regarding all the things to understand in general management. You may not be an expert in all areas, but you know more than the average employee. To start preparing your children for the top position, they must understand how things work at the bottom. When they’ve spent time in the trenches, they better comprehend operations, and the kind of people they’ll need to employ in the future.
- Stretch your children’s abilities by having them work for another company. The period after graduation is a scary phase of life, but jumping into the family business right away isn’t the best move. Children have an urge to distinguish themselves from their parents, and working for another company is a great way to do so. Let them spread their wings, learn new things and appreciate small victories outside of the business. If and when they choose to work for the family business, they’ll feel better about the decision.
Sounds Familiar
Solid tips. And I've actually seen them in action. A prime example: When I started my career in IT journalism, I saw CMP Media transition from one generation of family ownership to the next. The twist? One of the second-generation family members actually worked for another media company before ascending to the top post at the family owned business his parents had started.
In the weeks and months ahead, we'll continue to take a closer look at family owned IT service providers, and the steps they're taking to groom a new generation of leadership...
