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The Proper Way for Taking over the Family Business

Family Business taking over by next generation

There are some young people who really want no part of the family business, then there are those that are just itching to take over the reins.  It can be really difficult on the younger generation to take a back seat and watch how their parents run the family operation.

The older generation has their set to ways for running it and stand firm because their ideals have served them well for years.   After all it was their efforts that have kept the business alive for this long.

On the other side the younger ones have a vision as to how to grow the business by utilizing today’s modern technology.   In many cases there is a period of time where neither side seems to be able to compromise.   The young ones soon to become the business manager try to bite their tongue and live for the day that the parents are going to retire.  Often that doesn’t mean that in the retired stage that the parents are not going to try and stay involved on the sidelines even for a short period of time.  The transition period can be a trying time for the family owned business.

The first lesson to be learned by the young one taking over is that probably the staff has been on board for a good many years.   There is probably going to be a little bit of animosity with the workers.   At the same time they can be a very valuable resource simply because of their experience.   The young boss is going to have to be humble and patient and make changes slowly especially if the intention is to bring in new staff.

Intention and attitude

It would do the young new owner well to come into the business with not only the right intentions but attitude as well.  Coming in with I can do better attitude is going to send the wrong message.  Coming in with the premise that the parents and staff have done a great job at building the foundation of the business and because of this it’s a golden opportunity to grow the business is a much better approach.

Realize it may be a rocky road for the next little while

Statistics show that businesses that are handed down to the second generation have a 70% failure rate.  It could be simply because of the wrong approach.  When taking over the family business the wise thing to do is walk before you run.  It just very well be that your parents really did no best.   After all they have brought the business to the point where you have something to move forward with into the future.

 

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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

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Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant

Email: sam@torontoaccountant.ca

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