Our Expert Advice series throws the spotlight on family succession, a tricky and sometimes emotional subject.
Our core advice to parents considering passing their business on to their children must first have open discussions with them about their aspirations and whether they are interested in continuing the family business. If they are it’s vital to involve them early, provide opportunities for them to learn the relevant skills, and ensure the company can adapt to current market conditions.
However, there are a number of reasons why your children might not be so keen to take over the business. Understanding these factors enables parents to make more informed decisions about the company’s future. Here are some common reasons:
Different Interests and Passions: Gone are the days when the family trade was automatically passed from father to son. Children often have their own interests and career aspirations that may not align with the family business. They might want to pursue careers in fields that they are passionate about, which could be completely unrelated to the business you have.
Pressure and Expectations: The expectation of taking over the family business can create immense pressure. Your children might feel overwhelmed by the responsibility and fear of not living up to your achievements. This can deter them from wanting to step into those shoes.
Desire for Independence: Many young adults seek independence and want to carve out their own path. Taking over the family business might feel like they are living in their parents’ shadow, which can be unappealing for those wanting to establish their own identity.
Work-Life Balance: Managing a business often demands long hours and personal sacrifices. The rewards are great, but so are the challenges and they may simply not want that for themselves or their own family.
Lack of Interest in Entrepreneurship: Not everyone is interested in or suited for entrepreneurship. Some children may prefer more stable or structured career paths.
Economic and Market Changes: The economic landscape and market conditions may have changed significantly since your business was founded. Your children might see limited growth potential or increased risk in the current market, making the business less attractive.
Skills and Expertise Mismatch: The skills and knowledge required to run the business might be very different from what your children have learned or are interested in. They might feel ill-prepared or disinterested in acquiring the necessary skills.
Family Dynamics and Relationships: Managing a family business can create complications in personal relationships. Potential conflicts with siblings or parents regarding the direction or operations of the business can be a significant deterrent.
Financial Considerations: If the business is struggling or needs significant investment to modernise or expand, your children may be reluctant to take on the financial burden.
Globalisation and Mobility: In today’s world, young people have more opportunities to work and live abroad. They might prefer to explore these opportunities rather than being tied down to a family business in one location.
A personal reflection:
A few years ago, a high-profile businessman from Dragons’ Den approached me to join a founding team for a new company in Mayfair, London. Three months after we started, my son, Josh, graduated from Brunel University. He had worked with me during the summer at my previous company and excelled, so I offered him a temporary position with the potential to be permanent. Josh joined and did well, but after six weeks, it was clear he wasn’t enjoying it. When we sat down and talked, he said, “Dad, this is just not for me.”
This reminded me of a previous meeting with a mother and son. The son had taken over the family business when his father fell ill, despite not wanting to. He ran it successfully for over 15 years, but admitted he never wanted to run it. His story made me vow never to put my children in that position.
So, I told Josh he should pursue what he loves. He now works happily in sports management. I’ve shared this story at seminars and often see knowing smiles between parents and children.
My advice to any parent is: don’t assume your children will want to follow in your footsteps. Although they may share your entrepreneurial spirit, they may not share your passion for your business. It’s important to let them pursue their true interests, even if it means working elsewhere.
This also means that your carefully planned exit strategy may not now involve passing the business on to your children. Don’t be disappointed if this is the case. Selling your business and using some of the proceeds to fund a more exciting opportunity for your son or daughter may be the best solution for you and your family.
Entrepreneurs Hub is a corporate finance company helping UK business owners sell their businesses smartly. Learn more from attending our free webinar on selling your business for maximum value or contact us to discuss how we can help you.
