Bringing your children into the business without assuming

Aug 29
3 min read

Updated: 4 days ago

Introduction

An owner has always assumed the business will pass to their son or daughter. The child has assumed the same thing, or has assumed the opposite, and neither has said so directly in twenty years.

Meanwhile a long-serving manager who expected to be considered watches a family member arrive with authority they have not earned, and the business acquires two problems at once: a succession built on an unspoken assumption, and a team that has drawn its own conclusions. Both are avoidable and both require conversations most families do not have. Each side assumes the other has said something, and neither has.

1. Bringing your children into the business starts by asking whether they want it

The assumption underneath everything.

Ask directly, and make it genuinely acceptable to say no. Children frequently join out of obligation and leave a decade later, or stay unhappily, and both outcomes damage the business and the family.

2. Be honest about whether they are suited to it

The hardest judgement.

Wanting the business and being able to run it are different things. An owner unable to assess this objectively should get an outside view, because the alternative is discovering it after handing over control.

3. Have them work elsewhere first

The most valuable single step.

Several years in another organisation gives them experience the family business cannot provide, credibility with staff, and the ability to know whether they are choosing this or defaulting to it.

4. Give them a real job with real accountability

Not a title.

A defined role, actual responsibilities, and the same standards as anybody else. Family members in undefined positions are resented by staff and learn very little, and the business gets neither capability nor loyalty from it.

5. Be explicit with the rest of the team

They have already noticed.

Say what the role is, what it is not, and how it fits. Ambiguity here produces speculation, and capable non-family staff leave when they conclude that their route is blocked by somebody's surname.

6. Separate employment from inheritance

Two different things.

Working in the business is a job with pay; owning it is a separate question. Families frequently conflate the two, which produces a child who assumes ownership is accruing and siblings who assume something different.

7. Think about the children who are not involved

Where family disputes originate.

A business passing to one child affects what the others receive, and fairness across a family is not the same as equality of shares. This needs deliberate thought and, usually, professional advice.

8. Plan the handover over years

Not an event.

Gradual transfer of responsibility, decision-making and eventually ownership, with the previous generation stepping back genuinely rather than nominally. Handovers that happen suddenly, or never quite happen, are the two common failure modes.

9. Take advice on structure and tax

Substantial and jurisdiction-specific.

Transferring a business to family has significant tax implications and several available structures, and the difference between a planned transfer and an unplanned one can be very large. This is worth professional input well in advance.

Consider whether the answer is a sale instead. An owner whose children do not want the business, or are not suited to it, is frequently better served by selling to a third party or to the management team, and treating that as a legitimate outcome rather than a failure.

Conclusion

Replace the assumptions with conversations, because both sides have usually made them silently.

Ask whether they genuinely want it and make refusal acceptable, assess honestly whether they are suited to it, have them work elsewhere first, give them a defined role with real accountability, be explicit with the rest of the team about what the role is, separate employment from inheritance, consider the children not involved in the business, plan the handover over years rather than as an event, take advice on structure and tax well in advance, and treat a sale as a legitimate alternative.