How to Hand Down the Family Business – Part 1

For the predecessor:
Adapt to changes.  Normally, the younger generation wants to come in and try new things, says James. The older generation remembers what solutions worked well for them. “I used to say to my father, ‘Daddy, did you run the business in the 60s and 70s the way your father ran it in the 40s and 50s?’” James remembers. “He would say, ‘Well, no son. I had to make changes.’ And I would say, ‘So what makes you think I can run the business in the 80s and 90s the way you ran it in the 60s and 70s?’”

For the successor:
Honor your history but keep your eye open to the ever-changing economic landscape. Business cycles are faster and faster. Be able to shift strategies if need be. What may have been a sure thing a generation ago, will not be now.

For the predecessor:
Have a well-defined succession plan in place. Know when you will retire. Some founders will hold on to the very end, sometimes until it is too late. It can be challenging if the next generation doesn’t know when or if they will be able to take control or stretch and do their own thing.

For the successor:
Discuss and define your transition into power. Make sure there is a very defined timeline as to when you will succeed your predecessor. Outline a plan to ensure that you are exposed to all of the relevant operations of the business. Also, there are certain milestones that you need to accomplish. For example, you might agree that you need to be in sales for three years, in finance for three years, production for three years, and then you will take control as CEO.

Check back next week for more tips from Chuck James III on preparing your company’s next CEO.