Hi I am Craig Cairns, I am the President and majority owner at Howe & Rusling. Today on StreetSmarts, I am going to focus on something a little bit personal to me—Succession Planning and Kids.
I am extremely fortunate to have had the opportunity to own and run Howe & Rusling and I would like to think I have learned some things: such as I would never discount the importance of hard work and willingness to take risk to owning a successful business. Even more important than that are the people with whom one chooses to partner or hire. Finally, I would not discount good luck either—the blessings of timing and breaks.
While the business has grown successfully, I have done a lot of thinking about my personal situation and my 7 kids.
Especially on how to handle business succession. Because of the nature of the business I have been able to observe business owners and their kids, and also how money affects people and their kids, and raising kids as one’s means change. I have witnessed good exceptions and examples but also plenty of examples that are not so good.
“Shirtsleeves to shirtsleeves” in 3 generations might be an overstatement for what happens when businesses are passed down to successive generations, just like I am certain there are plenty of successful people who have gone to bed late and slept in who ended up “healthy, wealthy and wise,” but like all conventional wisdom there is something to be learned and I think there are pitfalls to be avoided.
My kids will roll their eyes if they watch this because my favorite thing to tell them is that “I am raising you without expectations so you will never be disappointed” and they will laugh because some of what follows is “do as I say and not as I do.” But here goes:
Expectations are important.
General expectations are healthy such as expecting kids to work hard and the expectation that they will go to college if they are so inclined. However, I think specific expectations such as expecting kids to go to a specific college or follow in our professional footsteps can be unhealthy. Kids have enough to worry about than having to live up to their parents’ specific expectations.
I especially do not think business owners should express the expectation that their kids will join the business. While the vision of inviting kids into the business and having them live next door in the same hometown can be appealing it tends not to be helpful to the business or the kids. Once again, there are exceptions and I have known some of the exceptions personally, but my observation is that it tends to not work out that well. I believe that kids should be expected to find their own way and should be allowed to fail on their own while they are finding their way. Succeeding on their own and supporting themselves is a key to happiness in my opinion and is more likely to lead to well-adjusted grown-up kids. If joining the family business is a hope, let it be a silent hope. If the grown-up kid develops a skill set that is helpful in the business after finding success elsewhere that is a way that it might work.
Businesses do not tend to divide that well. (In my case, especially by 7).
There can be issues between the business owner and the kids including if the business owner hangs around too long. There can be issues between siblings and then with cousins as more generations pass. At the end of the day, there simply may not be enough management jobs as there are relatives nor profits to go around. Spousal perceptions can lead to bitterness as well.
I think about the word entitlement a lot and how best to have kids avoid the feeling. Setting the example of our own hard work is a good first step, but not enough. Expecting kids to work hard and earn their own spending money and raising them so they do not need us should be our goal. If a business owner is determined that the kids should join the business let them learn the business from the bottom up and earn their way into management. Kids should feel as little entitled as possible, and kids should be expected to earn the respect of their co-workers through hard work and appropriate pay while learning the business.
Most of these thoughts apply to kids and wealth generally and not just to kids and a family-owned business.
Unhealthy expectations about money and parental support can last a lifetime and lead to unhappy lives for kids. It can be hard as a parent when we want the best for our kids and it causes pain to see them fail on their own especially when we perceive we have the means to help them succeed. I think it is worth fighting the urge to do too much instead focusing on expectations of positive characteristics that lead to success and away from the expectations of what parents or a family business will provide.
Anyway, my kids love it when I lecture them just as much as I am sure you did today, but thank you for listening to today’s Street$marts.