Transitioning family-owned businesses to the new generations of business owners requires planning, strategy, and conversation. And with some 10,000 baby boomers hitting retirement every day, according to Pew Research Center, many family businesses are being passed down by Baby Boomers to Gen Xers and Millenials.
Courtney Tempin, chief operating officer at Chicago’s JB Training Solutions who also co-wrote Manager 3.0: A Millennial’s Guide to Rewriting the Rules of Management (Amacom, 2013) says of Millenials that, “They have often relied on others to tell them what to do from an early age.” Tempin urges Baby Boomers to train their Millenials, saying, “Millennials [born roughly between 1982 and 2004] particularly love mentorship.”
Corporate manager, Aaron McDaniel, an entrepreneur himself and author of The Young Professional’s Guide to Managing (Career Press, 2013), stresses that for business success to continue, Boomers need to get the new generation interested in and passionate about the business’s vision and mission. “With technology, great customer service looks very different in execution today than 20 years ago, but the principles are the same. If you work to ingrain the mission and vision in the mind of your successor, it will help build the type of legacy you want to leave on the business.”
Passion isn’t enough. Technology and social media should be handled with caution during the transition. “When it comes to using new technologies, I have seen many boomers, my parents included, shut down and avoid using it,” McDaniel explains. “While it is a good idea to let your younger successors manage these parts of the business, it is important for you to understand these things to ensure the business is still being run properly and is not being derailed by these new tools.”
Some mistakes are okay, though, and while consistent or large failure is not recommended, some can be of help to the younger generations. “Millennials’ parents are overprotective. They swoop in and help out a lot. But failing is one of those really big learning experiences, if people are allowed to make mistakes and cope with them on their own,” Templin says. McDaniel agrees adding, “Don’t let the failures get catastrophic, but let them mess up on a couple orders. Ask yourself, is it better that they make the mistake now, while you are there to catch it, explain the lesson, and help clean up? Or is it better that they make the mistake after you have gone? As they say, it is better to make a mistake with thousands now than with millions later.”
One of the more challenging tasks facing Baby Boomers who are passing the torch is about really letting go, says Joel Freimuth, president of Blue Pearl Consulting. “It’s very difficult to get the older generation out of the company when they need to give up the reins. They don’t know what else to do, and often the children are not helpful in transitioning them,” he says. Gen Xers (born 1965-1982) can help to smooth transitions. “They are the best at making every generation feel there’s still a place for them in the workplace. They can create nice bridges between their fathers and their little brothers, because they are open to using technology and experimenting but they also can understand the traditional ways to do business,” says Freimuth. Templin suggests balance. For example, “Don’t leave a company expecting your successors to grow it by 50 percent, or expand to X amount of locations by year-end.” Templin says. Millennials may need to be taught that trying hard is not enough, “They have to accomplish something,” she says.
Klein, Karen E. “Preparing a Family Business for the Next Generation”; Bloomberg Businessweek. 7/23/13.