Who Will Take Over Your Business – and Do They Even Want To?
Nine trillion dollars in household wealth and assets is expected to land in the laps of Gen Xers and millennials within the next 10 years. Are they ready?
What about the transfer of business ownership? Are the Gen Xers and millennials among us primed to take over the family venture? Do they even want to?
In Iowa, many of our family businesses have roots in agriculture, an exceedingly important industry to not only the state, but the world. When it comes to handing over the reins to the world’s most important food source, can our planet afford to cross its collective fingers and hope the sons and daughters of America’s farmers are able and willing to accept them?
It all starts with conversation. Every business owners, small and large, ag and non-ag alike, need to get a chat with the next generation on the calendar. It’s not difficult to understand why many people avoid it. For family-owned businesses especially, these talks can be at best awkward, at worst heartbreaking. Some find it easier to have an independent advisor participate or even lead the dialogue to keep emotions from getting in the way of an effective succession planning exercise.
Like any good conversation, listening is critical. Whether you decide to approach your planning alone or with an advisor, you want to come to the discussion with at least a basic list of questions to ask the individual(s) you are considering as the next leaders of your business. Here are a few to consider:
Is the family business something you would consider as a career?
It may seem like a no-brainer, but too often business owners assume incorrectly that the company will be ushered into its next era by children or close relatives. You want to be assured this is indeed the case before you begin your succession planning. Ask the question straight out.
How would you like to contribute to the company?
It’s possible the individual you have in mind for taking over your business has no real desire to lead. Perhaps he or she would like to contribute from the front lines rather than the executive suite.
Are you prepared to go through the hiring process just like any other leader of the business would?
Too often, children or relatives of business owners assume their position without having to demonstrate their talent. Showing off their skills can happen within your company walls, of course, but you may want them to prove their talents and leadership capabilities elsewhere to gain an independent view of their ability to be hard-working and strategic. Addressing this sooner rather than later can set both sides of the leadership generation up for success.
Once you have the outcomes of a solid level-set conversation, you can begin building out a thorough and simple-to-execute succession plan. Over the coming months, we’ll delve a little deeper into some of the components that should be included in such a plan.
Mark K. Phillips is cash management services manager for Bank Iowa, Iowa’s second largest family-owned financial institution. He can be reached at email@example.com. To learn more, visit www.bankiowa.bank. Member FDIC.