Three Key Points in Handing Off to the Next Generation

Bob had a profitable company that he had built up over 25 years. He knew how to run it on instinct. Are we going to be tight on cash? Time to buy inventory? It was all second nature. His son had worked in the business for a number of years, but did not run the place. Bob decide to retire, travel a bit and enjoy life. So he let his son run the place. Unfortunately, Junior did not have the same instincts as dad. Profits tumbled, cash disappeared and the business ended up deep in debt in less than a year.

What happened?

There are a few key points that stand out in this situation:

• Junior's personality was different than dad's. (Pretty common, right?)

• Junior did not have dad's years of experience to rely on.

• The business was run by Bob's instincts, not in a repeatable manner.

While these three things can make it tougher to take over a business, it is not impossible.

Here are some points to consider when handing off to the next generation.

• Personality and experience determine how someone runs a business.

• Someone who runs on instinct is going to have trouble training somebody who thinks a different way.

• Just because a business has been successful getting to a size, does not mean that same approach is going to work well going forward.

Have you considered passing your company to the next generation? What concerns or questions are you thinking about?

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