Passing your business off to your adult child can be unnerving. It doesn't have to be though. Here are 5 essential skills they must develop before they can take over.
Outside Perspective: Your successor must gain and keep an outside perspective on the world and the economy, independent of their knowledge of the business. This is difficult to build if they've only ever worked inside it. One of the best things I did to develop an outside perspective was to study in Spain for a semester, and then live in Hungary for a month. I also taught Spanish at a University for 3 years. We recommend that family business owners mandate that their kids work elsewhere for a period of time, and we've heard great feedback from those who follow this pattern.
Basics of Accounting: Your successor needs to know the books, and they need to have a specific eye for profit. Too often we've heard this skill dismissed or downplayed in leadership books and podcasts. One of the best things your heir can do for the employees you've worked hard to develop is to keep their company profitable so they can keep good jobs.
Teamwork: Your kids probably see you as their hero, in life but also in business. They may be tempted to play the hero when they succeed you. Help them build the discipline of teamwork, saying no to rugged individualism, and accepting that others have unique skills, talents and aptitude that the company can and must capitalize on for everyone's benefit.
Listening: One of the most valuable skills a future leader can develop right now is the ability to truly listen to others. Anthony Iannarino's book The Only Sales Guide You'll Ever Need has an entire chapter dedicated to this skill, and it's one of the best we have read. Your heir needs to learn to listen to outside mentors and advisors, their leadership team, their employees, their customers, and even the trends of the market and of your specific industry.
Sales: If you're the first generation business owner, chances are you are or have been the company's best sales person. You've developed relationships with customers, suppliers, industry partners, and the general public that have built your company's reputation. Your successor needs to learn this skill.
This doesn't mean they need to lead the sales department, and in fact, they may not sell your product or service at all. But they do need to know how to "sell" your company - their company - both inside to employees and leadership, and outside to customers and the general public. They need to know why their company is unique and be able to draw others into this inspired leadership.
Word of caution: Your successor may not "sell" the way you have, and that's ok. If you have allowed them to develop well, they will come with their own experiences, personality, and style. Feel free to coach and mentor, but don't coach their uniqueness out of them.
These 5 skills - an outside perspective, the basics of accounting, teamwork, listening, and sales - can help your heir develop into a successor that would make you proud, and keep the company growing into the future.
We hope this has been helpful to you, and if you know of others that would benefit from reading this or other articles relating to Exit Planning, we invite you to share these with them.
With that, we thank you, and we will see you tomorrow!
Any opinions are those of Timothy Weddle and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation.
This material is being provided for information purposes only. Raymond James is not affiliated with nor endorses Anthony Iannarino or The Only Sales Guide You'll Ever Need.
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