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Should you pass your business on to your kids?

Another blog/e-article impressed me recently – by John Warrillow, who is an expert on selling businesses and author of Built to Sell. I heard about it when he was a recent guest on the E-Myth blog website.

John thinks that passing your business to your kids is usually NOT a good idea. My general experience of working with clients is that John is right – business life, especially dealing with colleagues, is complicated enough without having to factor in the nuances of family relationships. There are one or two exceptions, but not many.

John’s reasons are:

1. What if your son or daughter is smarter than you?

If you have smart, ambitious kids, they will be inclined to want to live up to your success. The late Ted Rogers, who has been called ‘Canada’s Steve Jobs’, became a billionaire by being a maniacal worker and tyrannical boss. In his final years, he admitted that his legendary drive came from wanting to live up to his late father’s success.

If your kids are as talented as you think they are, wouldn’t you want to give them the satisfaction of applying their talents to a business they started on their own? The one thing your business can’t give your kids, and the one thing you can’t buy them as a parent, is the self-esteem that comes from knowing they are succeeding on their own.

2. What if your son or daughter is dumber than you?

If your child lacks your intelligence, intuition, acumen, etc., he or she will forever toil in your long shadow. Would you want your kids to feel inferior for the rest of their lives?

3. What if your kids are lazier than you?

Most second- and third-generation family members feel entitled to the fruits of the family business. Do you want to raise spoiled kids and grandkids?

4. Your kids may not want to run your business

No matter how successful and profitable your business, your kids may not want it. Allen Taylor sat beside me on a panel discussion hosted by Houser, Henry & Syron recently. Taylor’s dad, Lawrence, started Taylor Pipe in 1964. When Lawrence became ill, he asked Allen to join the family business. Allen had had no intention of joining the business and, in fact, was on his way to a law degree when his father asked for his help. Allen joined his father’s business out of a sense of obligation rather than an interest in pipe fittings.

Would you want your kids to resent you for guilting them into the business down the road?

5. What if you pass on a jalopy?

Parents often see their kids as the natural successors for their business in part because they don’t know what else to do with the company. Despite being profitable, the company may not be sellable, and its managers may lack the experience or finances to buy the business, so parents invite their kids to buy the company over time for a share in future profits. If nobody else would buy your business, why would you want to lock your kids into the same handcuffs you’ve worn?

6. What if you alienate your employees?

As soon as you invite your newly-minted MBA son or daughter to work in the business, your professional managers will dust off their résumés, realising that Junior has won the lucky-sperm lottery and is about to leapfrog them on the company ladder. Would you want to alienate the very people who have dedicated their professional lives to helping you succeed?

7. What if you upset your other kids?

A family feud erupted when Lawrence Taylor’s lawyer revealed, in the reading of his will, that Lawrence wanted Allen, and not his siblings, to run the family business. Would you want to irrevocably change your relationship with the children who are not invited to replace

Find out more at John Warrillow’s website –

What do you think?

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