Should You Join The Family Firm?
When John decided to pursue his career by coming to work at the family funeral home he thought (as did everyone else) that someday he would succeed his parents and own the firm. John is now 46 and his parents are in their late 60’s. In retrospect, John realizes that things haven’t been what he expected. He didn’t so much join the family firm as go to work for his parents.
At 46 John has never been allowed to make a major decision, never seen the company’s financial statements and is unsure whenever retirement comes for his parents whether he will have the chance to buy it (he has no significant cash resources) or if it will be sold to a third party.
This may sound bad to you, dear reader, but it is much more the norm than the exception. And it could all be avoided by asking some critical questions up front.
3 types of parents
I find 3 types of parents who own small businesses.
- Those whose dream it is to pass the business on to their children
- Those who welcome their children into the business but are ambivalent about it.
- Those who would prefer their children seek other opportunities
From what I have learned about family businesses in general, each represents about 1/3 of current business owners.
But the real question is whether the current generation will ever be prepared to transition the business to their kids appropriately…and appropriately begins almost the day children join the business.
It is often wise at a young age to “try on” the role. I do believe if children are considering funeral service as a career that they work for a couple of years at the family firm…just like everyone else. This means the same regimen, expectations, compensation and hours. NO SPECIAL TREATMENT. In this way, everyone has the chance before final commitments are made to see if it’s a good fit. Warning signs might be:
- Inability to keep the same hours as other employees
- Difficulty in interacting with families, guests and (especially) dead bodies
- Lack of reliability
- Inability to see oneself in this role for the rest of one’s life.
- Inability to get along with your parents or siblings
There are good questions to ask yourself too:
- What is motivating me to join the firm?
- Dad or mom wants me to but I am not sure
- I can’t find anything else that interests me and I know I can get the job
- I can’t make as much money doing anything else
- I have watched my parents and I want to be like them
- I don’t really know
- Are family relationships healthy enough?
- Does our family have a track record of making good decisions together?
- Does my family value my input?
- How do we historically resolve disputes?
- What is my role compared to my siblings/cousins?
- Ask your parents early
- what is my career path?
- How will I be developed to take over running the firm?
- How will we know I am doing well?
- How do you envision my involvement in company governance?
- What, specifically, are your expectations for my performance?
- If we decide this is not a good fit, what then?
- is there a path to ownership?
- How do you imagine you will someday hand over ownership?
- is ownership available to siblings that don’t work in the business?
- If the answer to this is yes it should be a deal killer.
- How can I best contribute to the company’s prosperity?
- When it’s time for you to retire will I need to buy the company for full value or discounted value?
- Mom, Dad what is your vision for our future?
- what will we look like in 20 years?
- How will we get there?
- Will we still be relevant?
- Will my brothers and sisters be joining us?
- How will we determine who should be in charge?
- Will we have equal ownership?
- If so, how will we break the inevitable tie?
As I write this it occurs to me that most owners I know aren’t prepared for this type of conversation. But, maybe that’s a good thing. Because if you engage in this conversation (parents and children and key employees) it will cause you to crystallize some of the things you need to start working on to get you to that inevitable day.
100% of us will die and 100% will someday stop working. In my practice I see good stories; but, more often, I see sad stories. The good ones almost always are about people who thought things through ahead of time. The sad ones often didn’t think about it at all.
Funeral directors are notoriously passive-aggressive. This is especially so when they don’t want to address difficult issues. Sometimes it is necessary to have a 3rd party moderate this process. If, however, you are getting nowhere in getting your parents to address these important issues or answers are ambivalent and vague you have no right to expect that will ever change. So, you have a career decision to make. Some of the most successful owners I know had to confront the issue head-on and were prepared to leave the family firm. In the end, everyone was glad they did. It’s called peace of mind.