"Someday this company will be yours." This statement may sound like an innocent promise from a well-meaning parent, but it can wreak havoc within a family business. When children grow up believing that no matter how they act, the business will be theirs to run, an entitlement attitude often flourishes. Furthermore, once that seed is planted, it's very difficult to stop it. As I have written before, it is difficult to escape a culture of entitlement and that entitlement is very effective at strangling the growth of an otherwise vibrant family business.
Hand your kids a key to the business too early, and you could unlock the wrong attitude. One of the best ways to prevent a child's sense of entitlement to the family business and any wealth surrounding it is to nip that attitude in the bud before it roots. From the time children are young, business owners need to talk about the business and family values in a way that deemphasizes the entitlement concept. Start by telling stories. Children are mesmerized by the tales of hard work and sacrifice that accompanied the formation or shaky years of the business--especially when their grandparents or other older relatives relate the tales.
As children mature, parents should weave into family conversations what it means to have a family business. Does it provide you with automatic authority and privileges? Or is its message one of stewardship or teaching values to the next generation, whereby more is expected from you simply because you're a member of the family who owns it? All this may be hard for teenagers to swallow, but the idea that they have to set high standards for themselves if they come into the business gets through eventually.
Succession to a family member should not be a gift. It should be earned - earned through hard work, honesty, integrity, dedication, leadership, competence and trust. As an owner, it is necessary to instill a strong work ethic and the development of leadership skills in the next generation. The responsibility is two-fold. It is one of “Preparation” and “Protection”; Preparation for succession and Protection against the possibility that the child could harm the business.
I would love to hear what you do in your family business to avoid an attitude of entitlement? What and how are you teaching the next generation to “Prepare” and to “Protect?”
Great post! I remember growing up through the hard times when my father was starting his now very successful CPA firm. In particular one Christmas, as a child, when my mother sat my brother and I down and told us that this Christmas wasn't going to be like any other. Or perhaps the days we spent going door to door hanging 'door fliers' advertising my father's new business. And yet today, we turn away clients, are in a position to 'fire' bad clients and advertise only by word of mouth. I can imagine 3rd and 4th generations not grasping those difficult years where other income is needed to support a family. Great article, I will remember to tell these stories to my children.
-EK, CPA - Pennsylvania.
Posted by: EK, CPA | January 08, 2010 at 10:47 AM