Elaine

Its a dream. A dream I personally lived. Become an entrepreneur. Start your own company, be your own boss and pass the company on to the next generation. Unfortunately, the odds are against you. The truth is the majority of family held businesses dont make it past the first generation. I sold my business before my kids had a chance to express their disinterest in it.

Some businesses make it from generation to generation because the founder is intent on creating a family legacy or the next generation is intent on carrying on that legacy. Shareholder agreements are common place in those companies that do make it through generations. Buy sell agreements which dictate who, how, when and to whom stock can be sold become a family protection umbrella that insures that stock remains within the family and the company.

Second or third generation companies that fail to survive are generally run by heirs that just dont have the same passion and same interest in the business as their predecessors. The company is often run into the ground due to lack of skill, interest and commitment.

Another issue that can lead to failure in second and third generation is sibling rivalry. When several heirs all work in the business it is common for conflict and resentment to exist. Sometimes this conflict is so open that employees become very uncomfortable, unproductive and may begin taking sides.

Unless a company has well thought out succession plans, a family doctrine and even a code of conduct, problems are almost guaranteed. That does not mean that it is impossible to succeed in business with siblings sharing executive authority. However, the odds are stacked against it.

Many if not all family members working in the business have feelings of entitlement to some degree. This is generally true of at least one if not all of the siblings. Choosing the next president becomes even more difficult if the children have used their name as a title instead of the actual title of the job function they performed and the position they hold in the company (This is often unintentional and some kids dont even realize it). This difficulty increases exponentially if none of the kids have demonstrated a high level of competence, respect for all employees, leadership skills that pattern the servant style and at least some promise of potential to fill the presidents shoes.

Although the majority of parents would prefer that their children take over the business and carry on the family legacy, this is not always the best option available. I know it is difficult for any parent to admit that their child may not possess the skill sets necessary to take over as President of the company. However, the reality is, that situation actually does exist in many family businesses.

Family owned/privately held organizations in wholesale distribution, both small and large, with succession issues, family preparation and second and third generation leadership issues have been subjected to the evolution of leadership. These organizations are often founded by an aggressive, highly talented entrepreneur. Many of the principles of leadership employed by the founder that helped build the success that the organization enjoyed in the past is not the type of leadership that will maintain that success through generations of ownership. The formation of a board with several outside directors can help ownership cross the transitional divide that often accompanies generational succession.

The board can also play an important role when it comes to dealing with personal family issues between siblings that become an issue at the office. So, even if you dont have family problems in your business, get a board. It might be one of the best decisions you will ever make.

http://www.ceostrategist.com Sign up to receive The Howl a free monthly newsletter that addresses real world industry issues. Straight talk about todays issues. Rick Johnson, expert speaker, wholesale distributions Leadership Strategist, founder of CEO Strategist, LLC a firm that helps clients create and maintain competitive advantage. Need a speaker for your next event, E-mail rick@ceostrategist.com