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Tag: Family Businesses

  • Your Entrepreneurial Elders’ Worries About Passing the Baton | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Between now and 2048, an estimated $124 trillion in family assets will be passed from Generation X to millennials and Gen Z, the first mass transfer of its kind. This is a phenomenon so significant that it is named the Great Wealth Transfer, and it’s an event that began unfolding in the mid-2010s, catalyzed by the retirement of the Baby Boomer generation.

    A market research firm called Cerulli and Associates estimated that out of the $124 trillion worth of assets that will be transferred, around $105 trillion will be inherited directly by heirs and $18 trillion will go to charity. Swiss banking giant UBS, in its 2024 wealth report, estimated that $83 trillion globally will be passed on within the next two decades, and that a large chunk of these assets will be held across the Asia Pacific region. A recent McKinsey report showed that the value of these assets circulating in this Eastern region could be worth $5.8 trillion by 2030.

    As a fourth-generation heir of the Kowloon Motor Bus Company, Hong Kong’s oldest transportation company, I inherited my family’s wealth at a really young age due to premature deaths within my family. Despite this, I managed to carry the business forward as a director and figurehead, which I believe is rare since research has shown that as many as 90% of family wealth is often lost by the third generation. I am in a unique position to speak about this subject as a Baby Boomer looking to transfer to younger generations.

    Among the concerns the older generation may have about the Great Wealth Transfer and how it will be orchestrated successfully across the coming years, here are what I consider to be three of the most salient points.

    Related: 3 Ways to Prepare Yourself for the Great Wealth Transfer

    1. Gauging millennial and Gen Z’s financial interest

    Most family elders, especially in Asia, are highly concerned about how they would go about educating their children about the family assets and businesses. How willing would their heirs be to take over a business that has been continuing for more than a hundred years? This is a common concern due to the fact that some of the oldest companies in the world are currently held by families in the East.

    This concern is compounded by the fact that Baby Boomers and Gen X have significantly different attitudes to money compared to their heirs, since these generations have been conditioned to aim for a “job for life,” with intense focus on accumulating savings for retirement. According to an article by the Financial Times, millennials (1981-1996) lack financial education, having the propensity to build up credit card debt, while Gen Z possess a short-term fiscal outlook compared to their elders.

    2. Emotions can get in the way of discussions

    There may be different types of emotions at play whenever the Great Wealth Transfer is mentioned in a family business. Older generations are generally more reluctant to discuss financial affairs more openly with younger generations, which can act as a barrier to effective communication. Moreover, younger generations may find it distressing to have discussions about inheriting wealth and business, as they often have connotations of death.

    Younger generations can also have significantly differing views to their elders when it comes to running a company, with evidence showing that they are more socially aware of issues that affect the world, such as climate change, AI revolution and globalization, while some members of older generations may have a more conservative attitude, with a greater focus on wealth preservation and conservation. These differences can make discussions about business succession more heated and prone to disagreements and family conflicts. This is one of the main reasons families delay these important conversations from taking place, which could negatively affect a smooth transfer.

    Related: Passing the Family Company to the Next Generation Is a Complicated Business

    3. A rush to transfer wealth

    An article written by the Guardian showed that the 2020 pandemic has accelerated the intergenerational wealth transfer due to unforeseen, untimely deaths. Many members of younger generations, especially in the UK, are beneficiaries of unexpected windfall, according to Treasury figures, which found that a record-breaking volume of inheritance tax was collected during 2021 and 2022: £6.1 billion.

    Research from Capital Group also found that high-net-worth families are actually accelerating the transfer of wealth to their heirs, in a survey conducted with 600 individuals across Europe, Asia Pacific and the U.S. The report found that 65% of Gen X and millennial inheritors who participated in the research said they had regrets about how they used their inheritance money, with nearly two in five respondents wishing they had invested more of their assets after the transfer.

    With these concerns percolating in older generations’ minds, it is only wise for family businesses to plan well ahead for the Great Wealth Transfer. Have those difficult conversations with your heirs early on so that unpredictable shifts will not shake up your family’s assets. And more importantly, it is important to ensure that the family wealth’s purpose is well-defined in this increasingly complex and volatile world, and for that, meaningful conversations between the generations need to continue. Family businesses can no longer rest on their laurels.

    Related: Running a Family Business Means You Need to Prepare Your Kids to Take Over — Here’s How to Do It Right.

    Between now and 2048, an estimated $124 trillion in family assets will be passed from Generation X to millennials and Gen Z, the first mass transfer of its kind. This is a phenomenon so significant that it is named the Great Wealth Transfer, and it’s an event that began unfolding in the mid-2010s, catalyzed by the retirement of the Baby Boomer generation.

    A market research firm called Cerulli and Associates estimated that out of the $124 trillion worth of assets that will be transferred, around $105 trillion will be inherited directly by heirs and $18 trillion will go to charity. Swiss banking giant UBS, in its 2024 wealth report, estimated that $83 trillion globally will be passed on within the next two decades, and that a large chunk of these assets will be held across the Asia Pacific region. A recent McKinsey report showed that the value of these assets circulating in this Eastern region could be worth $5.8 trillion by 2030.

    As a fourth-generation heir of the Kowloon Motor Bus Company, Hong Kong’s oldest transportation company, I inherited my family’s wealth at a really young age due to premature deaths within my family. Despite this, I managed to carry the business forward as a director and figurehead, which I believe is rare since research has shown that as many as 90% of family wealth is often lost by the third generation. I am in a unique position to speak about this subject as a Baby Boomer looking to transfer to younger generations.

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    William Louey

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  • 7 Strategies for Dealing with Gender Bias in Family Businesses | Entrepreneur

    7 Strategies for Dealing with Gender Bias in Family Businesses | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    For Janette Silva, having a family business has been both a blessing and a curse. As the sole daughter, her involvement with the family business was never predetermined, in contrast to her brothers, who have enjoyed the security of stable salaries and lifelong perks a family business brings.

    Gradually, Silva took on the mantle of running the company, yet the official CEO title remained out of her grasp. In addition to her professional duties, she shouldered the care of her aging parents and managed her household responsibilities. This burden wasn’t the subject of discussion but rather her family’s unspoken expectation. At her workplace, she often cringed when she heard phrases like, “You don’t know what you’re talking about; let me talk to your dad” or “Ah, I see, you got this job because you’re his daughter.”

    Although women in the broader business landscape contend with various gender biases, those in family businesses grapple with an added layer of complexity and severity that further complicates the picture — and the situation is worse than it might appear.

    Related: Running a Family Business Means You Need to Prepare Your Kids to Take Over — Here’s How to Do It Right.

    Revealing gender discrimination in family businesses

    Regrettably, stories like Silva’s are all too familiar. That should be no surprise, as gender-based expectations persistently permeate family dynamics. Nevertheless, in today’s world, it’s both unjust and unwise to limit the prospects of a capable family member on the basis of their gender.

    A research team composed of experts from my team at Loyola Marymount University’s Family Business Entrepreneurship Program, Business Consulting Resources, the University of San Francisco’s Gellert Family Business Center and Women Leaders in Family Enterprises decided to examine this issue more closely.

    We were curious about the extent to which women face uphill battles and how the experience of bias and discrimination in the family business impacts how they perceive their own sense of work performance and career progressions. We embarked on an extensive three-year study, which entailed conducting qualitative interviews and organizing focus groups in 2019 and 2020. This was followed in 2023 by an extensive survey involving more than 100 women leaders. Our respondents primarily represented multi-generational businesses (77%) consisting predominantly of CEOs or senior managers (74%) who boasted an average tenure of 16 years.

    Remarkable revelations

    Our study revealed that gender discrimination still casts a shadow, manifesting as the infamous “glass ceiling effect,” the persistent “sticky floor impact” and a lack of opportunities in leadership roles. Around 49% of our respondents reported experiencing gender bias (compared to 42% for all businesses in the U.S., according to Pew Research from 2017). Forty percent of the respondents who acknowledged bias also expressed a belief that their gender had hindered their progress within the family business.

    Given that our survey respondents were mostly top managers, it is not surprising that much of the biases came from the external business environment. They emanated from customers (51%), vendors (37%) and the broader business community (45%), highlighting the pervasiveness of the issue in our society. Astonishingly, family members themselves served as the source of discrimination in over a third of cases.

    One respondent candidly shared, “My father openly says women are no good in business,” while another recounted, “The men in the family are automatically granted the most senior positions, leaving me with limited options.” Additional comments painted a similar picture: “Had I been a boy, I would have been a managing director, but as a girl I wasn’t considered,” and “I was told that the CEO position would always be held by a male.” One woman leader poignantly reflected, “In my family business, I had to work tirelessly compared to my brothers to achieve the same recognition.”

    The consequences of gender biases proved enduring, leaving a lasting impact on those affected. Individuals who experienced bias reported that it had a detrimental effect on their work performance. They were more prone to suffering from imposter syndrome — an affliction characterized by feelings of inadequacy, self-doubt and a haunting fear of being exposed as a fraud. This syndrome had the potential to further erode their performance, making these findings both eye-opening and concerning.

    Related: The Pros and Cons of Hiring Family Members in a Small Business

    Navigating unique challenges in family businesses

    Women in family-owned businesses have traditionally fared better than those in large publicly owned companies. For instance, it was widely celebrated that, as of January 2023, women had exceeded the 10% threshold for Fortune 500 CEOs. On the other hand, it is generally accepted that at least 24% of family businesses are led by a woman CEO or president. This progress is commendable, especially when considering that family businesses often impose distinctive challenges to their female members.

    One key challenge arises from entrenched family traditions rooted in the culture and history of these businesses, which can overshadow an objective assessment of qualifications. Typically, sons ascend to leadership roles, relegating daughters to supportive positions, regardless of their abilities. Furthermore, the familial dynamics and the informal nature of decision-making within these family units — relying more on personal biases and stereotypes than formal policies and procedures — can further perpetuate gender disparities. Compounding the problem is the usual absence of external oversight (e.g., external board members) in family-owned enterprises.

    Adding to the complexity of gender discrimination in family businesses is its deeply impactful nature. Women who experience gender bias often encounter it from their own kin, including parents, siblings and close family associates. This personal dimension can heighten the emotional toll, and confronting family members risks straining vital relationships further.

    Due to their emotional commitment in the legacy of the business, many women find it exceedingly difficult to pursue other opportunities, even when discrimination persists. This predicament is exacerbated by the fact that women in family businesses often have limited external support systems to turn to, as seeking help from external sources can amplify familial conflicts. As a result, women who grapple with gender discrimination in family businesses often find themselves extremely isolated, making the experience all the more formidable.

    This type of situation could sound familiar to you — perhaps you’re the leader of a family business or have experienced it firsthand. But it is possible to break the chains of gender bias and impostor syndrome in family business.

    The following are the strategic steps you can take to not only dispel gender bias but also fortify family dynamics and improve business performance.

    Acknowledge the problem: Collectively agree on the presence of gender bias within the family business and the need for change. Ensure buy-in and commitment from top leadership.

    Revamp the family charter: Revise the family charter or institute a code of conduct that explicitly champions gender equality and nondiscrimination within the family and the business.

    Educate and raise awareness: Educate all family members and employees about the prevalence and significance of gender equality using workshops and other training programs.

    Implement a gender-equal HR policy: Rework the HR policies to ensure fairness, objectivity and transparency across all facets — hiring, evaluation, promotion and compensation.

    Forge an equal opportunity succession plan: Redefine succession planning through an egalitarian lens, focusing on capabilities rather than gender.

    Foster a supportive culture: Establish an inclusive and supportive work culture where every individual can freely voice concerns without reprisal. This culture also acts as a potent antidote to imposter syndrome.

    Tap into external expertise: Consider enlisting the aid of external consultants or experts in diversity and inclusion to provide guidance and offer an objective perspective.

    Related: How to Sustain a Family Business Across Generations

    Transforming family businesses

    Gender bias in family businesses can have a detrimental effect on both the business and the family. On the other hand, breaking free from bias and discrimination and rewriting the rules can have a positive impact on the business, leading to improved morale and a competitive advantage in the marketplace. It also fosters more harmonious family relationships, allowing both the family and the business to truly flourish.

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    David Y. Choi

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  • Running a Family Business Means You Need to Prepare Your Kids to Take Over — Here’s How to Do It Right. | Entrepreneur

    Running a Family Business Means You Need to Prepare Your Kids to Take Over — Here’s How to Do It Right. | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Succession planning in family businesses is a topic that often evokes mixed emotions. On one hand, it represents the continuation of a legacy, while on the other, it can be a source of anxiety and uncertainty. Anyone who has seen the HBO show Succession can attest to the roller coaster of emotions that takes place. Preparing your children for the next phase of your business is a complex process that requires careful consideration, communication and planning. In this article, we’ll explore the key steps involved in helping to ensure a smooth transition of your business to the next generation.

    One of the critical mistakes many family business owners make is waiting too long to initiate succession planning. Ideally, this process should begin years, if not decades, before you intend to step down. Early planning allows you to identify and address potential challenges, ensure your children are adequately prepared and create a transition that is as seamless as possible.

    Related: 1 in 10 Leaders Say Succession Planning Is Not Worth the Time and Money It Costs — Here’s Why They’re Wrong.

    Start with open and honest communication

    According to the Family Business Institute, only about 12% of family businesses survive into the third generation. One of the major reasons is lack of communication.

    Effective communication is the cornerstone of a successful succession plan. Begin by having open and honest conversations with your children about your intentions and expectations for the business. These discussions should be ongoing and involve all relevant family members, including those who may not be directly involved in the business but could still be affected by the transition.

    Encourage your children to express their own aspirations and concerns. Listen carefully to their input and be willing to adapt your plan based on their feedback. This collaborative approach can help build trust and ensure that everyone is on the same page.

    Identify and develop key skills

    Once you’ve established open communication, it’s essential to assess your children’s readiness to take over the business. This assessment should go beyond their desire to be involved and focus on their skills, knowledge and experience. Consider the following questions:

    1. Do they have the necessary education and training? Ensure that your children have the qualifications and capabilities required to run the business successfully. If not, provide opportunities for them to acquire the necessary skills.
    2. Have they gained relevant work experience? Working outside the family business can provide valuable insights and experience that can be beneficial when they eventually take the reins. A lot of family businesses require their children to work for other companies before they can join the family business. This gives the children a better perspective of working for others and also, they can gain industry knowledge to help the family business.
    3. Are they familiar with the industry? A deep understanding of your industry, market trends and competition is crucial. Encourage your children to stay informed and engaged in industry-related activities.
    4. Do they possess leadership qualities? Effective leadership is essential for running a business. Assess your children’s ability to lead and manage teams, make tough decisions and handle the challenges of business ownership.
    5. Are they financially responsible? Ensure that your children have a good understanding of financial management, including budgeting, financial forecasting and risk management.

    If your children lack certain skills or experience, consider providing them with mentorship, additional training or opportunities to work in different roles within the company to develop their capabilities gradually. Once you feel that they are ready for the next step, it’s time to create a plan of action.

    Related: 4 Lessons on Succession Planning for Entrepreneurs

    Create a clear succession plan

    A well-defined succession plan is a roadmap for the transition of your business. It should outline the specific steps and timeline for transferring ownership and leadership roles. Your plan should address key aspects such as:

    1. Leadership transition: Specify when and how leadership responsibilities will transfer from you to your children. Be clear about who will take on which roles and how decisions will be made during the transition period.
    2. Ownership transition: Determine how ownership shares will be transferred and at what price. This may involve discussions about equity distribution, buy-sell agreements and estate planning.
    3. Training and development: Outline a comprehensive plan for developing your children’s skills and knowledge in preparation for their new roles. Consider creating a structured training program or providing access to external resources.
    4. Conflict resolution: Anticipate potential conflicts that may arise during the transition and establish a process for resolving them. This can help prevent disputes from escalating and jeopardizing the business.
    5. Contingency plans: Prepare for unforeseen circumstances by developing contingency plans. What happens if one of your children decides not to join the business? How will you handle unexpected challenges or changes in the market?
    6. Legal and financial considerations: Consult with legal and financial advisors to ensure that your succession plan complies with all legal requirements and minimizes tax implications.

    Seek external advice

    While family businesses often benefit from maintaining control within the family, seeking external advice can be invaluable during the succession planning process. Consider involving professional advisors, such as lawyers, accountants, financial advisors and business consultants, who specialize in family business succession.

    These professionals can provide objective insights, help navigate complex legal and financial matters and offer guidance on best practices. Their advice can be particularly useful when dealing with sensitive issues like estate planning and tax implications.

    Gradual transition and mentorship

    A successful transition doesn’t happen overnight. It’s often best to implement a gradual shift of responsibilities and ownership over a period of time. This allows your children to gain practical experience and gradually assume greater leadership roles.

    Mentorship plays a crucial role in this process. As the current business owner, you can provide valuable guidance, share your knowledge and insights and help your children develop the confidence and skills necessary to lead effectively. Encourage them to take on increasing responsibilities and decision-making authority as they demonstrate their readiness.

    Related: Succession Planning: It’s Never Too Early to Start Thinking About the Future of Your Business

    Monitor progress and adapt

    Once the succession plan is in motion, it’s essential to regularly monitor progress and be willing to adapt as needed. Keep the lines of communication open with your children and other key stakeholders. Periodically review the plan to ensure it remains aligned with the evolving needs of the business and the capabilities of your children.

    Be prepared to make adjustments if unforeseen challenges arise or if your children’s interests and abilities change over time. Flexibility is a key factor in ensuring a successful transition.

    Preparing your children for the next phase of your business is a complex and multifaceted process. It requires early planning, open communication and a clear succession plan. By assessing your children’s skills, providing ongoing mentoring, seeking external advice and gradually transitioning leadership and ownership, you can increase the likelihood of a smooth and successful handover. Remember that a well-executed succession plan not only secures the future of your business but also helps to preserve the family legacy for generations to come.

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    Mark Kravietz

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  • The Pros and Cons of Hiring Family Members in a Small Business | Entrepreneur

    The Pros and Cons of Hiring Family Members in a Small Business | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Even though we already had four children, when my husband Phil and I started CorpNet, our goal was not to create a dynastic family firm. Yet here we are, 14 years later, with two kids on the payroll.

    That’s not unusual; there are over 5.5 million family-owned businesses in America. Like most small businesses, family-owned companies struggle to find skilled employees. To meet this challenge, small business owners should ignore conventional wisdom and explore all avenues of finding good workers. One way to find the employees you need is to do what we did — hire family members, whether your own or relatives of your current staff.

    While this may be perceived as nepotism, hiring family members has several strategic advantages.

    Related: 5 Tips to Successfully Manage ‘Friends and Family’ Hires

    The pros

    1. Shared vision and values

    Family members often share similar values, work ethics and long-term goals. In PwC’s 2023 U.S. Family Business Survey, 90% of respondents of all generations say, “Growth is important because it enables them to invest in their company’s future.”

    Your kids likely share your values and goals. But look beyond that. Let’s say you have a high-performing employee that fits your company’s culture — they may have a sibling or a spouse with the same traits. Hiring them (of course, you should vet them as you would any new hire) can save you the time and money of searching for a new employee and the concern that your new hire won’t fit your company culture.

    When employees (related or not) share values, it’s often easier to work toward achieving common goals since they’re invested in each other’s success.

    2. Trust

    For small businesses to succeed, your team must trust one another. Family members have a pre-existing foundation of trust, and that attitude can spread to other employees, creating a strong team bond.

    Trust among your staff enhances communication, collaboration, goal-setting and decision-making. And 91% of business executives surveyed in PwC’s 2023 Trust Survey say maintaining trust improves the bottom line.

    3. Loyalty

    Employees want to work for companies where they know their opinions are respected. When your hire a relative of a current employee, they feel valued that you trusted their recommendation, deepening their loyalty.

    Family members likely enjoy working together, which further cements their loyalty to your business.

    4. Efficient communication

    Family members typically communicate more easily and effectively due to their familiarity and shared experiences. This streamlined communication minimizes miscommunications and misunderstandings.

    5. Lower recruitment costs

    Recruitment can be costly and time-consuming — especially today when many businesses compete for the same employees. Small business owners can reduce recruitment expenses, such as paying for job listings, recruiters or employment agencies, by hiring their kids or employees’ relatives.

    Also, since your children and the relatives of current employees are already familiar with your business, the onboarding process is shorter, reducing training time and costs.

    Related: The No. 1 Reason You Should Hire a Family Member

    The cons

    Of course, hiring family members can have some potential drawbacks. Here’s what to look out for:

    1. Appearance of nepotism

    Whether you’re hiring members of employees’ families or yours, other employees may resent these new hires, assuming they’re not qualified for the job. Transparency is essential. Tell your staff about the familial relationship and why you think the new worker will make a great team member.

    2. Preferential treatment

    It is critical that the new hire does not get preferential treatment. Family members should avoid inside jokes, telling secrets and any other behavior that would cause resentment.

    Job responsibilities, wages and paid time off for similar positions should be the same. Even a hint of special treatment will increase resentment in the rest of the staff.

    3. Emotional baggage

    Family members may bring emotional baggage and existing conflicts into the workplace, creating tension and making it difficult to work together. Those tensions can permeate throughout your company, negatively impacting growth.

    Regular communication is key to resolving family conflicts. The 2023 North America Family Business Report from Brightstar Capital Partners and Campden Wealth reveals that 49% of respondents experienced family conflict on the job, which for 41% resulted in a communications breakdown, impacting the entire company.

    Before family members join your company, you or your HR manager should set boundaries between the related employees (including you and your family). Explain what behaviors are not acceptable in the office. Consider adding a section about this to your employee handbooks.

    Related: The Do’s and Don’ts of Involving Family in Your Business

    Tips for hiring family members

    When hiring relatives, you need to:

    • Be clear about your expectations. Set clear expectations for the new hires so they understand their roles and responsibilities. When hiring family, it’s key to temper your expectations. Don’t expect them to be perfect or to think exactly as you do, and be patient. Give them time to adjust to their new roles. Also, if applicable, explain your expectations to the employee who suggested you hire their relative. If things don’t work out, you don’t want to lose your other employee as well.
    • Be fair and impartial. All employees should be treated equally. Favoritism is never acceptable.
    • Hire the best person for the job. Never feel obligated to hire relatives (your own or an employee’s) simply because they’re family. Make sure they’re qualified for the job.

    Before making a final decision, weighing the benefits of hiring family members against the potential drawbacks is critical.

    At my company, we have hired relatives of our employees and found that they work hard, quickly fit into our company culture and help us focus on growth and success. And while my kids work at CorpNet now, I don’t have unrealistic expectations. We’re not grooming them to take over. My children have aspirations and want to start their own businesses.

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    Nellie Akalp

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  • How to Sustain a Family Business Over Multiple Generations | Entrepreneur

    How to Sustain a Family Business Over Multiple Generations | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Preparing the next generation for leadership is one of the hardest parts of running a family business. Whether the company has been run for several generations or just one until now, knowing when to hand over the reins to the next leader is a challenge. Identifying the proper person for the task, and strengthening them for it, is something many family business owners grapple with during their careers.

    Of course, not every family-owned business has a successor to take on the leadership responsibilities of the organization. Some company founders may not have children or other relatives they can rely on to run the business, and in other cases, relatives have no interest in taking the helm of the company. Senior leaders with their leadership transition mapped out are at an advantage, but they often worry about their relative’s ability to handle the upcoming challenges they know will arise.

    That said, preparing the future generation for what’s to come is vital.

    Related: Your Family Business Won’t Survive If You Don’t Plan for the Leadership Transition

    People learn through experience, not lectures

    Think back to when you were a young adult, navigating the world outside your parent’s proverbial nest. You probably encountered several unexpected scenarios that have probably left an impression on you to this very day.

    Perhaps you bought your first car without any assistance and wound up with an expensive monthly payment at a high-interest rate because you didn’t understand the importance of building up your credit. Maybe you fumbled an early relationship or went overseas for the first time. Typically, these experiences make for memories that stay with us for decades, and all of them can act as learning experiences that we look to when we encounter scenarios that require us to act.

    While you may remember the countless talks your parents gave you, they likely didn’t resonate as a genuine experience might have. They certainly outlined the potential consequences of our actions, but unless you actively went against the advice, you likely never experienced the repercussions.

    As such, It can be tempting to swoop down and stop your child from making a decision you know will adversely impact them, but allowing them to experience the consequences makes them better future decision-makers, which will be positive for the family business.

    Related: A 400-Year-Old Family Business Remains the ‘Gold Standard’ in Its Category — Its First Women Leaders Reveal the Secret

    Give the next generation room to grow

    Lecturing the future generation on what it takes to run the business isn’t going to provide the outcome you’re looking for. Instead, up-and-coming leaders need to have their own experiences away from the company (and the eyes of their parents) to realize their capabilities fully.

    If “saving the day” is a sticking point for you, perhaps it’s time to let your children experience life outside of your constant observation. If they’re planning for college, for instance, promote universities that are out of state or overseas.

    It’s essential to allow the next generation to identify potential solutions to problems and try them out. Even if you know the solution won’t work, they’ll enjoy the excitement of bringing a new idea to the table and implementing it. They’ll have the space to grow into themselves and be better prepared to deal with adversity as a result.

    Allow your successors to develop their own identity

    A child or relative who grows up in the shadow of the family business needs time away to build their identity. The family name may be quite familiar in their local community. People will likely associate them with their parent’s name and the company, and sometimes, being the child of a family business owner makes it easier to find acceptance in prep schools and college.

    Pushing them to create their own identity by working toward a degree of their choice and joining clubs or activities that interest them is crucial. Don’t push your agenda; allow them to pursue their own identity.

    In addition, rather than hiring your relative to the family business fresh out of college, require them to work for another organization for a few years. Experience away from the family business will open their eyes to new ways of handling work-related issues that may benefit the family company in the future.

    Related: How to Successfully Prepare Your Family Business for the Next Generation

    Push character development activities

    People who always have someone there to “bail them out” are never given the opportunity to learn their capabilities. Whether you’re the founder of your family business or a second-generational leader, you’ve likely failed in some of your endeavors, and you likely remember your failures and what it took to overcome them quite vividly.

    Facing complex challenges and pushing through them is part of developing a solid sense of character. Rather than allowing them to give up and let someone else take on the task, future leaders must work through their hardships.

    Give your future leaders a chance to fail. As harsh as that may sound, they’ll learn that hard work and thoughtfulness are critical to overcoming obstacles and gaining the confidence they need to deal with future setbacks.

    Don’t hand everything over on a silver platter

    You’ve probably worked extremely hard to get where you are today, and you’ve just as likely seen significant successes, losses, and a bit of everything in between. You’ll want to ensure that your future leaders understand what you went through, even if they weren’t there to witness it in your company’s early days.

    Rather than handing your child the keys to your business outright, make them work for them. If you’re nearing retirement age and they’re unprepared to run the business, find another family member or a trusted external advisor to handle it for a while. They can mentor the next generation and move them along the succession path according to an appropriate timeline.

    It can be tempting to assume the next generation is ready to take over your company and allow you to enjoy your twilight years, but you must ensure they have time to develop skills and realize their identity. The best things in life come from hard work and determination, so give the future generational leaders of your company the space to build their character before bestowing the business upon them.

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    Shawn Cole

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  • ‘Succession:’ 5 Lessons the Roy Family Could Stand to Learn | Entrepreneur

    ‘Succession:’ 5 Lessons the Roy Family Could Stand to Learn | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    For three seasons, HBO’s award-winning series, Succession, has been centered around what the show’s title suggests: Who will inherit control of the Waystar Royco? As someone who has spent the better part of my career working with the real-life Logan Roys of the world — we’re talking ultra-wealthy individuals, often with children from multiple marriages, sitting at the helm of major corporations — let’s just say I have thoughts on how Logan Roy, the patriarch of the Roy family and founder of Waystar Royco, has orchestrated the company’s succession plan.

    As we head into the highly anticipated fourth and final season, I’ll share, based on my extensive experience — as a planner, strategist and personal advisor for individuals and families as well as a pioneer and premier authority on legacy planning — five lessons the Roy family could benefit from learning.

    But first, let’s recap where we left off. Logan Roy is set to relinquish control of his media and entertainment conglomerate. But rather than handing the reins to one of his three children, in a surprise twist, he says he has decided to sell — not merge — Waystar Royco to streaming platform GoJo. This means none of Logan’s children will take over as the buyout deal would completely cut them out of the business.

    Related: What Entrepreneurs Can Learn from HBO’s ‘Succession’

    It’s a move that no one expected, or even thought was possible. A stipulation that was negotiated by Logan’s second wife as part of their divorce settlement protected the children from ever losing control of the company. Logan Roy would need the children’s unanimous consent for any change of control — or so we thought.

    In the final moments of the season, Logan Roy revealed he renegotiated that divorce settlement, and the children no longer have such power. It would appear heading into season 4 that Logan Roy is (yet again) in complete control of Waystar Royco’s fate, at least for now.

    While this succession nightmare makes for entertaining TV, there are some real lessons we can learn based on how the show panned out. So let’s dive right in!

    1. You absolutely need a succession plan for your business

    Okay, if there were a succession plan, then there probably would not be a show. That said, Logan Roy is in his 80s, and yet there is no plan for who will take over as CEO of Waystar Royco should he die or become incapacitated, nor does there seem to be a plan in place for what happens to his wealth and controlling shares of the company. While not uncommon, this is completely irresponsible. A succession plan ensures a smooth transition upon a CEO’s resignation, death or incapacity and helps avoid the risks of lost revenue, decreased productivity or a damaged reputation.

    2. A prenuptial agreement is a must

    A prenuptial agreement is absolutely necessary to protect your business. Without one, you risk your business becoming a marital asset subject to divorce proceedings. Had Logan Roy had a prenuptial agreement, his shares of Waystar Royco could have been clearly designated as non-marital assets to which his ex-wife had no right or entitlement. He could have retained complete control of the company, and his children would never have had the opportunity to band together and potentially block a sale or merger of the company. Even worse, the provision that was negotiated actually incentivizes Logan to pit his children against each other so they are never a unified front — which brings us to our next issue.

    Related: Are You an Authoritative Leader like Logan Roy or a Personality Hire Like Cousin Greg? Which ‘Succession’ Character Are You At Work?

    3. Family success is built upon healthy communication and trust

    A now-famous study conducted by Roy Williams of the Williams Group surveyed 3,250 families over a 20-year period and found that the reason 70% of intergenerational wealth transfers fail is because of a breakdown of communication and trust within the family unit. The Roy family could be the poster children for this study.

    There is absolutely zero trust amongst the family members, nor is there healthy communication. As a result, the reality is that Logan’s fortune will most likely be squandered quickly after his death. If Logan wanted his fortune to last generations, he would have to create healthy lines of communication amongst the family that emphasized transparency and trust. Regular family meetings and outings are one way of accomplishing this. One client of mine even had a family newsletter that went out regularly.

    4. Money does not buy happiness

    I don’t know about you, but I do not desire to be a member of the Roy family. Despite their wealth, they just don’t seem like happy people. Perhaps that is because, as the old adage goes, money cannot buy happiness. Well, that old adage has been backed by science. According to positive psychology, happiness in the sense of your overall well-being and flourishing as a human consists of five elements (referred to as “PERMA“): positive emotions, engagement, positive relationships, meaning and accomplishments. Money and material possessions only produce temporary gratification and not long-term happiness.

    Related: Succession Planning: How to Ensure Your Business Will Thrive Without You

    5. Take the time to discover your life purpose

    The fundamental flaw with every character in HBO’s Succession is that each lacks a sense of life purpose. We do not know why Logan Roy created Waystar Royco or what the company’s mission is. It is suggested that Logan grew up impoverished and under harsh circumstances around the beginning of World War II. Are we to believe that Logan’s drive is fueled by a desire to escape, and never return to, those circumstances? His children, on the other hand, seem simply to be vying for their father’s love and approval. In other words, everyone seems to be stuck in some form of trauma, as opposed to pursuing some greater life purpose.

    The most successful clients I have worked with, in terms of living happy, fulfilling lives while achieving great financial wealth, are those who are not defined by their circumstances and have lived their lives in pursuit of a greater purpose.

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    Daniel Scott

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  • The Benefits of Mixing Family and Business | Entrepreneur

    The Benefits of Mixing Family and Business | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    There’s a classic expression that one shouldn’t mix family with business; However, some of the most powerful entrepreneurial duos were related in some way, shape or form.

    So in 2014, when I decided to co-found a company with my brother, I wasn’t entirely sure what to expect. We’d shared a bedroom for almost 10 years, but could we share a cap table? The last time we had to split anything, it was a personal pizza, and I obviously deserved the bigger half because I was the older brother.

    In all seriousness, I knew that we had an incredible relationship and we trusted one another, but I was also worried that this venture might royally screw up that relationship. In the end, it all worked out and became one of the most rewarding experiences of my life.

    This article builds the case for starting a family business and suggestions on how to mix the two for the best possible outcome.

    Related: 5 Reasons Why ‘Family’ and ‘Business’ Do Mix

    You know each other’s moves

    Growing up, my brother and I would play one-on-one basketball in our front yard. We’d complain about the fact that each of us had a “move” that neither of us could stop. However, when we played two-on-two, we always seemed to figure out how to use these moves together to play better.

    As entrepreneurs, we entered the game knowing what our strengths were and could more easily defer to one another in different situations. This process wasn’t perfect in the beginning. It did take some time to drop some of our prior expectations, specifically, which roles we’d play based on things that really didn’t matter like our age, title and years of experience.

    However, we had spent decades establishing trust, whereas our competitors might only have ten or fewer years of working experience together. This allowed us to make better decisions on day one versus having to spend years laying the foundation of trust.

    The fights are intense, but the resolution is quicker

    My brother and I had some epic throwdowns over the years. We’re still not allowed back in my mom’s hairdresser after the “Connie’s Corner Cuts” melee.

    As related founders, our feedback tends to flow more freely, and our fights are more emotionally charged. This forced us to be more conscious of and sensitive to the impact that these fights had on our other co-founders and employees. Don’t have the blowout fights in front of your employees. While this interaction between siblings may feel normal, it might suggest that there’s dysfunction in an otherwise healthy and thriving organization.

    On the positive side, with 30 years of experience fighting with one another, we’re able to come to a resolution quicker and gain alignment on key issues because we know how to have direct conversations without taking things personally. That has also become a major strategic advantage to move our business forward more quickly.

    Related: 7 Best Practices to Running a Healthy Family Business

    The stakes are higher, and the wins mean more

    My brother and I founded our company the year that my daughter Laura was born. I wanted to create a better life for her and my family, and my brother shared that level of accountability to build something that could provide financial independence for our immediate families.

    When things were rocky and our bank accounts were empty, we couldn’t quit on one another. Failure would not only make holidays awkward, but based on what we had both personally invested in the company, it would take years to recoup that loss.

    When we sold our company in 2021, it was a life-changing event for each of our families. Aside from the days my kids were born, I don’t think there has been a higher moment in my life when we closed on the sale of our company. Not because of the financial impact, although that helped, but more because I knew we had taken care of the people that we love most in the process and set an example for our kids on what it means to fight for something and the people that matter most.

    Would I do it again?

    Without question. Our time on earth is limited. On average, we spend 90,000 hours of our lives working. I want to spend that time with the people I love and trust, at least until one of us taps out and says “uncle.”

    Related: The Essential Qualities Every Family Business Needs To Survive

    A couple of takeaways

    • Working with family is awesome. You have established trust that can often take years for non-related founders to build, which becomes a major strategic advantage.

    • You’re already good at fighting, and you know each other’s moves. Bury your egos, and work in a way that aligns with your natural strengths and abilities.

    • The stakes become higher, so you’re accountable to one another to not screw it up.

    • Make space outside of your venture to focus on maintaining your personal relationship with your relative co-founder.

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    Justin Vandehey

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  • Here’s Why Your Children Should Not Inherit Your Business | Entrepreneur

    Here’s Why Your Children Should Not Inherit Your Business | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    There are some astounding statistics surrounding family business succession. First, the average lifespan of a family-owned business is only 24 years, or roughly one generation. In addition, nearly 60% of family-owned businesses fail to make it to the second generation, while nearly 90% fail to make it to the third generation. Nearly half of the family-owned business failures were caused by the founder’s death, while only 16.4% of family-owned businesses failed after an orderly transition.

    As an entrepreneur, you can spend your lifetime building your business. It is a unique asset that represents a large portion of your legacy. Yet, almost instinctively, you probably treat your business the same as your other assets and ultimately expect your children to inherit it along with the rest of your estate. Doing so, as the statistics show, virtually guarantees your business will fail. While you could labor over trying to solve the riddle of how to properly hand over your business to your children in a way that defies the odds, perhaps the better answer is to not leave your business to your children at all. Statistics aside, there are a number of very good reasons why your children should not inherit your business.

    Related: Billionaires and Millionaires Who Aren’t Leaving All Money to Their Children

    1. They need to be free to discover their own life purpose

    Everyone has a purpose in life — some value that only they are capable of bringing to this world. Rather than trying to groom your children to fit into your business, you must allow them to be free to discover who they truly are and what their purpose in life is. If that leads them back to your business, then great, but don’t hold your breath. The likelihood that your children’s life purpose falls squarely in line with the business you have created is slim.

    2. The family business can lead to an unfulfilling life

    Ask a room full of parents what they want for their children, and you will overwhelmingly hear that they want their children to be happy and live fulfilling lives. Science now points to five factors in living a happy, fulfilling life: positive emotions, engagement, relationships, meaning and accomplishments (often referred to as “PERMA”). Pressuring your children to take over the family business or creating such expectations can result in resentment and other negative emotions, cause your children to become disengaged and uninterested in the family business, hinder your children from developing meaningful relationships outside the family business, not fulfill your children’s sense of meaning or purpose and make them feel like they have not earned their position. In other words, your children could land low on the PERMA scale and end up less fulfilled than had they chosen some other path.

    3. Mixing family and business is complicated

    Family dynamics are complicated. Too often in a family business, personal relationships can interfere with professional ones. Issues that have percolated at home can easily find their way into the office, which can result in unnecessary feuding. Further, your family members may have very different ideas on how to fundamentally run a business, leading to conflicts and disagreements. All of this puts a strain on the business and can ultimately lead to its failure.

    Related: Want Your Succession Plan to Succeed? Avoid These 8 Stumbling Blocks

    4. Nobody likes nepotism

    Giving your children positions of power within your business can be seen by other employees as nepotism. This can result in resentment and lead to a toxic work environment. It is better to promote from within the company based on merit, not familial relationship.

    5. Avoiding an inherent conflict of interest

    Your children are your heirs and the economic beneficiaries of your estate. However, a large portion of your wealth may be tied up in the value of your business. As beneficiaries, your heirs will likely want access to your wealth and liquidity, in which case they may be incentivized to sell the company against your wishes or maximize distributions, rather than invest in the company’s growth. This could ultimately lead to the demise of the business.

    Related: Succession Planning: How to Ensure Your Business Will Thrive Without You

    When it comes to family business succession and legacy planning, a key distinction to make is between economic benefit and managerial control. While you may want your family to ultimately benefit economically from your business and legacy, the truth is that they are often the wrong managers of your business and legacy. Rather than looking to your family to be managers, you should consider sticking to experts, professional advisors and key employees who are best qualified to run the business and ensure its continued success and growth for generations to come.

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    Daniel Scott

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  • How a Family Turned the Tragic Death of Their Son Into an Online Legacy

    How a Family Turned the Tragic Death of Their Son Into an Online Legacy

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    Opinions expressed by Entrepreneur contributors are their own.

    On July 3rd, 2020, Bradi Nathan got the call no parent wants to receive: her son, Jack, had passed away at the age of nineteen. The prior evening, Jack had been at a friend’s birthday party and swallowed, what he thought, was a Percocet. The pill was laced with Fentanyl and he never woke up.


    Bradi Nathan

    Prior to Jack’s passing, he had created a company called Happy Jack, an online lifestyle brand and community designed for those struggling with mental illness. Jack had periodic bouts of depression and painting became his therapy. Happy Jack showcased the founder’s designs on apparel, with a portion of the proceeds going to mental health foundations. From the very first week of sales, Jack donated $1,000 to the Child Mind Institute.

    Bradi chose to continue what Jack started to honor his legacy and to continue his mission.

    “He wanted to change the world,” recalled Jack’s mom. “He wanted to make this world a better place by speaking openly and by letting other kids know that they were not alone.”

    Related: 5 Ways to Protect Your Mental Health as an Entrepreneur

    A son’s brand as a mother’s therapy

    Bradi continues to use Jack’s designs on new product drops and has since donated $60,000 to mental health foundations like Active Minds, Born This Way, Release Recovery and the American Cancer Society. The path to donation is not an easy one: sourcing, manufacturing, distribution, site management, customer service and fulfillment were all roles that Bradi stepped into in her son’s absence.

    “It’s funny when someone tells me that they contacted customer service,” revealed Bradi, “because I am customer service.”

    Happy Jack is a family-run business welcoming advice and consults from experts as they grow the brand organically. Bradi and Jack’s father David would ultimately like to have a COO step in, gain financing and build a proper infrastructure. This would allow them the space to focus on personally sharing Jack’s story.

    Related: Improve Mental Health Next Year by Breaking 17 Financial Rules

    Healing while helping

    With the additional aid of Jack’s sister, Drew, the project has partnered with fraternities across the country to create fundraising events. Brand ambassadors across college campuses are enlisted to help create mental health awareness. Happy Jack has also conducted pop-up shops in spaces like WeWork and the Seaport District. These allow the family to meet and share stories with many who too are struggling.

    “There was never a question as to whether or not I would continue Happy Jack,” added Bradi. “It seemed like the obvious thing to do.”

    Related: 8 Best Health and Wellness Podcasts

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    Robert Tuchman

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