When should you NOT pass your business to your kids?

Written By Steps To Faculty Published July 8th, 2010

Keeping it all in the family is a mantra for a lot of people; they want their kids to preside over the business they built and some people will blindly hand the keys to the enterprise over to their kids when the time comes. Yet, giving the keys to the son or daughter (or to both) may not always be a wise idea and business owners should never let family ties get in the way of business considerations; after all, if the kids go about things the wrong way, they can quickly destroy what it took you decades to build. Below are a few things to keep in mind when examining whether or not you should sell to your kids.

Step 1 – First thing Do they know the business?

This is the most important consideration of all – and it is the one thing that a parent should never overlook. If your children were never around when you were running the business, then it is fair to say that they are going to have to learn on the fly – and not everyone can learn on the fly and not every business can afford to have proprietors who learn on the fly. When you sit down with your children, you have to gauge how much they really know about the business and how willing they are – and how capable they are – to learn; if you sense they are not ready and may never be ready, then you may want to give the business over to someone else.

Step 2 – Second thing Why are they interested in the business?

Let’s get right down to brass tacks: sometimes people go into the family business because they lack other options. You have to ask yourself this question: is my son or daughter interested in the family business because they are having trouble finding work after college? Are they doing it because they want some ‘quick’ money? Those are tough questions but they are questions you must ask; otherwise, you may be giving your business over to people who do not have the company’s long-term interests at heart.

Third thing Do they love the business?

Did your children spend a lot of time around the business? Did they talk about it a lot? Did they have to be pressured to help out? Let’s be honest: just because you loved the business does not mean that the kids loved it. Thus, if your children do not love it, they may not be said to see it fall into disrepair. You really need to gauge the extent to which they are willing to sacrifice to keep the business going.

Selling a big business is a big step; no one can run the same organization forever and the moment will come when someone else will have to take the reins. When that day comes, you have to ask yourself if it will be your kids – or someone else can do a better job.

Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.