Do you own a business? Do you have kids? Do you want them involved in your business? Do you want them to run it one day? Oh, and by the way, do you get a day older every day?
This came up in conversation the other day, talking to women who will be on a panel with me next month at the Women’s Congress in Miami. My daughter is CEO of my company now and two other daughters are among the 40 employees.
The question was whether I did that on purpose. In other words, what did I do to make that happen.
Ironically, given that I’m a planner by profession, this was not the result of long-term planning, at least not exactly.
It took me years to connect in my mind my entrepreneurial business plan software business, Palo Alto Software, with the idea of family business. It never occurred to me. Even as several of our five children, then in their early teens or preteens, spent Sunday mornings sticking product labels on plastic floppy disks. Even as they took turns, as teenagers in high school, at answering the telephone in the office, it didn’t occur to me.
If you’re thinking to yourself, as you read this, that I must be pretty dumb, I say yes, that’s true, but on the other hand, this was a software business started in the heart of the Silicon Valley during the first PC boom, by an entrepreneur with a Stanford MBA degree. It wasn’t the kind of thing people normally associate with family business.
And also it took me years to recognize that exit strategy or succession could be relevant. I’ve loved the business for so long that it had become second nature. The thought of retirement was horrible, but I didn’t realize that I didn’t have to retire, just change jobs.
As it turned out, what did happen was the gradual recognition that I could change my job and put somebody else in charge, without retiring. I blog now, and speak and write and teach, while Sabrina runs the company. I work more hours than ever, but it’s a different job now and I love it. Nobody reports to me. What a great change. What a relief.
Tip #1: You will exit eventually. Deal with it.
This is life, not just business. Even if you think you’ll never sell your company or go public, you’re not going to run it forever. So think about exit strategy, whether you like it or not.
Tip #2: Two parents if possible, not just the one in the business.
This is a moot point of course if you’re both doing the same thing, but when it’s just one of the two parents doing the business, it’s still much better if two parents deal with children’s involvement, deciding how and when. In our case it was my business for the first decade but became our business as it grew.
Even in the old days, though, when it was just my business, my wife was always in favor of the kids understanding where the money came from. And of course we recognize that you don’t always have the luxury of two parents of the same mind. It’s a luxury, not a necessity.
Tip #3: Don’t plan your children into your business. It won’t work.
They’re supposed to do what they want, remember, not what you want? Or are we still in the 19th century (and it didn’t work that well then either)?
Trivia contest: name a major movie in which a central character was supposed to go into his or her parents’ business but didn’t. Answer: lots of right answers. It’s an archetype. It goes back to Abraham trashing his father’s store in the bible. Jesus was nicer about it, but he didn’t end up a carpenter. In Godfather, Don Corleone wanted Michael to be a senator, not the next don, but Michael made that decision, not his father. And for a more recent example, take Hiro in Heroes.
You have to hope they want to get involved, and maybe they will. Freedom to choose is essential. Working in the business has to be their choice, not yours.
Tip #4: Emphasize good education, and let them study what they want.
You want your children studying what interests them, not what interests you or what you think is good for the business.I’m talking higher education here, of course, not Mrs. Johnson’s reading class in the fourth grade. Let them study what they want and let those chips fall where they may. You don’t get good education by forcing it, and good education is way more important than the right subject. I hope you think that’s obvious.Despite owning my own business and having my MBA, I encouraged my kids to major in things other than business. They should get an education first, learn business later. It’s a trade, not a discipline. Of course I’m biased on this, my first degree was literature, my second one was journalism.
Tip #5: Share what you do. Talk about it. Open up. Tell stories.
My kids had to spend occasional weekend mornings putting sticky Palo Alto Software labels on floppy disks. It didn’t hurt them to know where the money (what there was of it in the beginning) came from. My wife and I shared the work. We walked together to the post office when I was starting a newsletter business, checking for new subscribers. The kids came too. None of that hurt.
Tip #6: Let them try things. Make it an attractive option.
We like these people we raised. We’re happy to have them involved. Whenever we could we tried to make the workplace a pleasant place to be. This of course means everybody, in our case of a 40-employee company that includes the 37 who aren’t our grownup children.
People don’t always find their best place right away. Don’t push them into corners, let them experiment. Let them work with who they want, on what they want, and eventually they’ll end up in a good place.
Ultimately what’s at stake here, if things work out right, is you can end up with well educated hard working people who know where the business came from, and why, and want to take it to the best place for its future. That’s really a good thing.
So, happily, things worked out right for me and my company. I love my new job and my company is growing, and the succession move has worked. So that’s why I want to share.
It’s scary to give advice about things like this to anybody, so I do so reluctantly. I hope I’m not one of those people who gets lucky and then takes credit for it.
The tips here come from experience. They are not from academic study.
When I was in business school we weren’t talking about family businesses. We did have a family business counselor for three years, and she helped us.
However, some of these rules contradict what I think is standard wisdom on succession and family business. For example, I think many family business counselors advise against talking business at home. And I think at least some experts on succession would recommend a longer and more explicit and more shared process for succession. But I’ve talked this over with my wife and several of the five grown-up children involved, and they agree that this is what we’d say, industry wisdom or not. So here’s what we come up with.
Looking back on this, and reviewing my tips, I can see of course that not everything here applies to everybody. Also, that I’ve probably left some key elements out, although not on purpose.
Furthermore, I’m embarrassed to seem to be recommending against planning. But in this very special case, planning is too much in danger of becoming pushing, as in pushing your children, forcing your dreams down their throats. So you can’t really plan on this, you have to just work on making the conditions right, and make it happen.
Image credit: The author