Handing the business over to a child can be a wrenching adjustment.
The sometimes-thorny question of business succession is looming large in hundreds of B.C. businesses as baby boomer owners begin thinking about retirement. A lot of entrepreneurs would like to pass on their business to a child or relative, but as one B.C. family learned, that often requires adjustment by all involved.
Terry Farmer operated five Accent Inns in B.C. for more than 20 years, but as retirement neared he had no plan for passing on his business. Neither of his children was interested in operating the hotel chain.
As in many family businesses, Farmer’s daughter Mandy had worked in the chain’s hotels since she was a teenager in a variety of roles. But she always expected it to be temporary and had no intention of working there after university. However, after she graduated, with nothing else on the horizon, she went back to the family business.
At her father’s suggestion she went into sales, and discovered she liked it. After five years, she knew this was a career for her, and she and her father went to the Canadian Association of Family Enterprise (CAFE) for help in organizing a succession training program.
Mandy enrolled in an executive MBA program to learn management, using her family business as a case study for her thesis. The one big pitfall of succession, she learned, was that many families don’t have a strategy for all parties involved. The Farmer family’s solution was to make Mandy a vice-president and move her into the same office as her father so she could learn how the business was managed. He had the big desk and she had the small desk.
A year later, their positions were reversed: Mandy moved over to the big desk and Terry took the small desk, acting as an adviser. The succession was aided by Mandy’s mother, who whisked her father off on two long cruise vacations, which gave everyone in the business, including employees, time to adjust.
Mandy also recognized that she had to put her own stamp on the business. She discovered that the hotels were seen as dated and indistinct, so she launched a rebranding and renovation campaign. This became a sticking point in the otherwise seamless succession: after so many years of familiarity and success with his hotels, her father couldn’t see the need to rebrand. Mandy responded by letting him witness some focus groups that confirmed the need, after which he came on board.
Another potential problem involved the hotel’s employees. Many were familiar with Mandy from her days as a young worker and viewed her with a sense of familiarity that didn’t fit her new role as CEO. However, she was able to devise team-building methods, such as contests that cemented staff as a group under her management.
Today, Terry Farmer still works for the company as an adviser and community representative. Mandy is the CEO and is planning to expand the chain with new properties. Most of the employees have remained with Accent Inns and anticipate working with an updated, forward-looking business.
• Take it slow. Let employees, managers and the new and old owners have time to adjust and consider new roles and the new systems.
• Form an advisory group. Groups such as CAFE can guide everyone involved through the unknown emotions, dynamics and psychology of transition.
• Communicate. Employees of family businesses may be apprehensive during a transition. Constant communication can smooth an otherwise wrenching change in their lives.