For small business owners, one of the most important concerns—but also, one of the least often considered concerns—is who will run the business when the owner moves on. Whether you plan to retire or are unexpectedly forced to step away due to health or other problems, you need a plan in place to ensure your business keeps running after you’re gone, particularly if your family depends on income from the business to pay the bills!
Of course, the most important step you need to take as soon as possible is to develop a business succession plan. However, your business succession plan is more than most business owners think. It’s not just a document that lists who’s in charge when you’re gone. It’s a legal document that outlines who, what, where, when, how, and why your business should operate to ensure it outlasts you.
But what if you want your child to run your business when you step away? If you spent time, money, and effort building your business, then it makes sense that you want to pass it on to your son or daughter. As a parent and business owner, instilling the entrepreneurial spirit in your children starts from an early age.
If you want your child to run your company one day, don’t forget these five secrets to raise him or her as part of the next generation of business owners:
1. Start Now
It’s never too early to expose your children to the family business! Talk to your children about your business and bring them with you to work so they can see what you do when you’re not at home.
Most importantly, avoid complaining about your business in front of them. Children don’t understand that adults need to vent sometimes. They’re more likely to hear your negative conversations about your work and correlate your comments with something that is always awful. It’s unlikely they’ll want to run your business when they grow up if they heard too many negative things about it throughout their lives.
2. Make Sure You Child Works for Other Companies First
If your child’s only work experience is at your company, then they’ll never have a chance to grow, thrive, and succeed on their own. Plus, the experience and knowledge they gain working for another company could be extremely valuable to your own business.
3. Don’t Let Your Child Start at the Top
When your child is ready to take on a full-time job with the company, don’t place them into a leadership role immediately. The best place for them to start is the same place that everyone else starts—at the bottom. They need to understand how the entire business operates, the challenges employees at all levels face, and how to interact with a wide variety of people (internally and externally).
4. Don’t Let Your Child Report to You
To be a leader, you first need to understand what it’s like to be led. You need to learn how to follow before you can lead. These aren’t just adages. They’re truths. Therefore, it’s critical that your child has many opportunities to gain experience under direct supervisors who are not you (or other family members). Make sure your child’s manager understands that he or she is to be treated the same as all other employees.
5. Develop a Business Succession Plan and Communicate it with All Employees
You need a comprehensive business succession plan to ensure your business not only continues to operate after you leave the company but also to ensure the succession plan aligns with your personal estate plan. You need to be certain your assets are protected!
Once you have your plan in place, you must make it extremely clear to all employees that your child will lead the company when you step away. If you don’t communicate this early and openly with employees, resentment can develop, which reduces employee morale, productivity, and profits!