Family Business

Passing family business on to next generation requires unique skills

June 24, 2012 

Henry Ford: automobile inventor, mass production founder, corporate giant, American icon.

Henry Ford: family business leader whose domineering nature contributed to the early death of his only son, and was forced out of his own business by his daughter-in-law before he killed the very business he founded.

Much of the talk about family business succession focuses on the “next generation.” Clearly there is merit for this emphasis. However, many times the unique nature of entrepreneurs, and the accompanying difficulties, is overlooked in the family business succession process.

It is common knowledge that entrepreneurs and business founders must be motivated risk-takers if they are to succeed. I have had clients who have sold virtually all they own to start the business. One client hopped on a plane to China, years before it was de rigueur, hired an English-speaking bartender and a zoo tour guide, and started a 200-person factory. “The passion and drive of successful business founders is so compelling that others are moved to want to join their cause, provide funding or otherwise help them succeed,” says Tom Miller, the Executive Director of the NC State Entrepreneurship Initiative. “And while monetary gain is nice, it is the drive to see their dream turn into reality that is the primary motivator behind their passion.”

Different demands

Going further, the June 2nd edition of the Economist indicates that many successful entrepreneurs are frequently somewhere “on the spectrum:” Asperger’s syndrome, attention deficit disorder and autism. Dyslexics are also thought to be a part of this group, with one study showing 35 percent of entrepreneurs being dyslexic compared to 10 percent of the population and 1 percent of professional managers. With the founders of IBM, GE and Apple also members of this elite club, it is hard to argue. (Steve Jobs is purported to have banned PowerPoint presentations in his meetings.) It seems that the age of the Geek has fully arrived, with many companies, especially in the Internet space, seeking out such individuals to be on the team to provide breakthrough thinking. Is the Organization Man dead?

And help is now available to guide these visionaries to success with entrepreneur programs now a mainstay at any self-respecting university. Indeed, here in the Triangle the nonprofit Cary Innovation Center was created to assist entrepreneurs from idea to launch. “We help people take their concept through the six phases of bringing a product or service to market with education, mentoring and resources” says Fred Hathaway, the CIC Director.

However, once the new company launches and becomes successful enough to survive, the demands of the business can require a different set of skills than the founder can provide. Indeed, the entrepreneur may actually become bored with the “systemization” required to grow a small business. So many times these newly budding businesses get sold off into the hands of professional managers.

Letting go is key

But what happens when the entrepreneur stays to the point of considering passing the business to their children? All those risk-taking, passionate, somewhat crazy characteristics that equipped the entrepreneur to create a successful business become detriments when trying to transition the business to the next generation. Perhaps more significant, their consuming love and possessiveness of the business they gave birth to drives a psychology that they actually are the business. How can they ever let go of it? How can anyone do as well? And how in the world could they go on another day if they separated from it? It is said that the death of a parent, spouse or child is the most traumatic event anyone can suffer. I would contend that disconnecting someone from a business they started and grew to success may rank number two.

To found a successful business is to make something out of nothing. This takes a special person with a unique constitution. But to take that business and successfully incorporate family members into it to the point where it transitions to the next generation requires a different set of skills. At a minimum the next generation cannot begin to drive the business until the current generation takes their hands off the steering wheel. But this can be especially hard for someone who has dedicated his life to building this particular car.

Henry Hutcheson is a nationally recognized family business speaker, author and consultant in Raleigh. Send questions to

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