Submitted by: Meghan Juday, Director of Family Business and Entrepreneurship, Saint Joseph’s University
So many businesses make investments that will pay off in future generations, and yet they’re not paying attention to their future generations. The next generations’ readiness to lead and understanding of the business are the most important investments a family business can make.
It’s understandable. Many parents don’t want to talk to their kids about their legacies. They don’t want their kids to know how much money they have, or how much money the kids will inherit. They try to protect the children from entitlement. But while you may be protecting them from the negative aspects of inherited assets, you’re not maximizing any of the positives aspects.
When preparing children for inheriting a family business, it doesn’t work to deny them any information or knowledge. If you do that, once they get their hands on their share of the family business, they won’t know how to deal with it.
There are a couple things that the kids really need to have.
- Make sure the kids know what the business is and what it does, from the time they’re very little. Even a manufacturing business can be introduced to small children through interactive plant tours.
- Make sure that every interaction that the kids have with the family and the business is exciting, fun and educational.
- Make sure that every time the older generations get to together for the business, they’re creating opportunities for the younger generations to spend time with each other, or be included in conversations about the business as appropriate.
For example, one family I work with has a multi-faceted next-generation program. The youngest kids, whose parents are in the family council, fly in or drive in with their parents every quarter. They get a babysitter and they play together and do fun activities while the parents are in meetings.
At the annual meetings, anybody who doesn’t need a nap does an interactive plant tour and does family camp. Then, as the kids get into the later high school years and college years, they have the flexibility to come into the meetings on and off. They can come for a morning session and then go back and play with the little kids in the afternoons. As they get older and understand more, they can stay for more and more of the meetings. High school and college kids get internships of varying lengths, based on their interests and age. This really helps inform what they’re interested in doing in college, too, and many are motivated to gain additional business experience.
It’s short-sighted to plan for the long-term growth of the business and not also plan for the long-term growth of the family. Being part of a family business can be one of the most rewarding things in life. The combination of family and business makes a unique combination, giving the opportunity for a financial return, but also an emotional return and a relationship return. Having a family business to unite an extended family can be highly positive.