How do I choose a successor?
Minneapolis attorney Sally Grossman gives some tips on how to choose a successor for a business.
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How to choose a successor. This should be done very carefully and not at home alone. No, I’m just kidding. But seriously, I think it needs a lot of thought. It’s probably one of the key components of a successful transition. I think you need to start very early. In fact, I think what a business owner who thinks at some point they’ll want to transition should do is start building a pool of interested applicants early on.
And that means for example, if you have a five-year-old, you can bring the five-year-old into the business. I mean any little kid can help try to sweep or empty wastebaskets. You know, make that business real to that child. Bring home things. If you don’t have product samples that are appropriate to bring home, you know, bring home pictures. Here is our new machine, you know, here is what we just put into the plant. Or bring home advertising. Anything that can make that business concrete to the child.
And then as they get older, I think it’s appropriate to offer part-time work or summer work to children. And I think you want to develop an employment policy, so that we’re not bringing in, you know, every child with no defined responsibilities. You want to make it as businesslike as possible. When the children become teenagers and college age I think they should get legitimate internships in the business.
And then I think you should develop a family employment policy. You should decide what are our rules for how family members get to be in this business? Do they have to have a college degree? Do they have to work for X years before they come back to the family business? Does it have to be in our industry? Can it be in any industry? There is a lot of advantages to that, because then a child can come back with expertise and new ideas and also, the child gets the self confidence. They’ve learned I can succeed in a place where mom or dad isn’t the boss, and that’s really important in teaching them how to hold their own against non-family key members who maybe have been there 30 years and think who is this kid coming in?
So develop your pool of interested applicants, and then I would say you ought to get some training and get some assessment of those kids’ skills as they grow through the business. Start thinking about who does what well? And who has the qualities? Not just the external attributes, but who has the internal attributes to do what you do? Ask yourself always what do I do? What is it that makes me successful in this job and what does someone need to know? What kind of experiences do they have to have to do what I do?
And then for example, if you had a daughter, who is in your marketing side and had leadership qualities and you thought this might be my successor, but she really wasn’t very strong on finance. You should take some steps to help her get stronger in finance. She doesn’t have to become your finance director, but maybe go to a seminar through your trade association. Maybe take a course at a local university. Maybe let her shadow your finance person for a certain period of time. So get her some of those skills that she doesn’t have.
There are also are professionals who will assess the skills your kids have and will help work with them to build up the areas where they don’t have strength. And so start early. Don’t just pick the person that you identify with by gender or personality. That might not be the best choice for the business going forward, but be very thoughtful about it. Start early and then communicate. Once you have decided, make sure that that person knows and make sure other people know and put a deadline on it.