Table of Contents
Tired of paperwork?
Owning a business means that at some point you will have to let your children or employees take over. There are many who wish to take on a family construction business. In some cases, children wanting to take over family businesses don’t really have any leadership skills because they haven’t actually had a chance to practice the trait of managing a business.
According to Forbes, more than two-thirds of family businesses fail after the transfer to the second generation. Because of this insanely large figure, it's better for businesses to start preparing their heirs as early and with as much preparation as possible. A successful multigenerational business is one that does not leave things to chance
So how can you as a business owner make this process go smoothly and ensure that your business will still be around twenty years later?
Let’s look at a few tips to help you get started.
Jobs at other companies help them learn valuable skills
If you’re planning for one of your children to take over the family business and they are young, it’s a good idea to let them work for other companies first. This is extremely beneficial, especially in cases where they have just graduated from high school or university. This way, they won’t develop an entitlement mindset while only working under you. Having a job outside of the family business will help them recognize how important leadership and teamwork is, they’ll be more confident and will bring so much more to the business when it’s time to take over. They can see what it’s like working as a construction worker for other companies and know how important treating your employees well is. Another major advantage is that all other experiences will add to your children’s credibility as a leader. No one will question how competent they are if they’ve worked on or managed a few projects, have done independent work, and have accomplished outside of the family business.
Start including them in your day-to-day as a business owner
Whenever you begin to mentor your future heir to the business, one way to ensure that they will become effective leaders is to include them in the work you do as a business owner. Even if they aren’t working for you in the beginning, allowing them to take part in important meetings, discussions and projects will show them how they should behave and act when in the shoes of an employer. They’ll learn a lot from you and how you do business without having any responsibility to the company.
Observation is one of the best ways that they can learn how a business is run. It’s also extremely beneficial to see teamwork in action and to see how your team responds to your leadership. This way, they can learn about the company culture - something that only experience can truly teach.One of the variables that contribute to both the success and failure of leadership transfer is transformation through innovation. In the “Empowering the future of family business” report published by KPMG, one of the case studies highlights how a Universal Cement Corporation used a combination of succession and innovation to ensure that the family-run business continues to be competitive and fit for the future. While innovation done right can yield great results, when done poorly can also be the cause of company deterioration. Newer generations are more tech-savvy and their vision - in most cases - is to transform the company by introducing technology that is supposed to make work more systematic and efficient. Digitalization through the implementation of various software is where succeeding generations usually start. Implementing a time and location tracking application to monitor the activity of field workers, or a general project management software to elevate the level of productivity are both great ideas that could propel your company forward. As such, hear out what these young, spirited entrepreneurs have to say - there is a lot of value that can be extracted from their understanding of technology!
Let them learn from different mentors
You being a mentor to your children will forever be one of the best benefits that they will have. Having other people as mentors will help them more than you can expect. In the end, the goal is not for them to only follow in your footsteps, but for them to make their own path and make the business even more successful.
In turn, as long as your future heir is a successful leader, your business will thrive. That’s why it’s extremely important for them to benefit from mentors other than yourself. They could learn a lot from financial and legal advisors, accountants, sales representatives, and more. In some cases, even family-friendly business coaches can help make sure that the transition is going well. They ensure that all parties’ interests are mediated while simultaneously helping keep the business going throughout the whole transition process.
Don’t put them at the top just yet
One tip that will help your business strive even after your child takes over the company, is to not give them the lead role in the very beginning. Serious roles should be earned, and this is the same for employees regardless if they’re your children or not. So developing a long-term growth plan is the best way to ensure that your company will be left in good and capable hands.
Lots of young entrepreneurs want to have the CEO position without realizing how much responsibility that requires. And in many cases, unless they’ve had a lot of experience, they just simply aren’t ready. Giving your child the top role right off the bat could actually be setting them up for failure, and risk the longevity of the business at the same time. Setting a timeline where they can start from the bottom and work their way up during a few years is the best way to successfully transfer the business to them.
Within a construction business, one way to do this is to have your child work a little with all departments. One year they could work on some projects together with the construction team, another year they could work in finances, the next year they could work in marketing and so on. This way, they’ll learn just about everything about your business, the employees, and the clients.
Passing the torch
Finally, after a long time of mentoring, tests, growth, and a lot of hard work, you’re now able to pass the torch to your child. This can be a pretty emotional event, especially if you’ve spent your whole life building your business. It’s never easy to pass on your life’s work to your successor. But there comes a time when you have to, and it can be a beautiful process.
Your business will continue to grow and thrive, and it will even change for the better with your child’s new passion and vision. Make sure they know that you believe in them and that you will always be there to help if needed.
In the end, if you’ve tried to prepare your successor as much as possible, then your business will be in good hands. And don’t forget that you don’t have to be completely hands-off. You can still be involved in the company as a board member or consultant if you so wish. You can also enjoy your retirement and pop in from time to time just to say hi to everyone. With all of the above tips, your future heir to the family business will have the knowledge and experience to keep the business going, help it grow and prosper.