American Painting Contractor Magazine

October 2012

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Page 13 of 55

Sound Business Management Dealing With a Family Succession Plan By Monroe Porter Dealing with family is emotional. Mix family and business together and you obviously have an emotionally charged combination. I am no family business expert, but since 90 percent of the busi- nesses we deal with are family business- es, I would be remiss not to share our consulting experiences. Parenting is a challenge. There were R no directions when my kids fell out of the womb. We had to figure it out as we went along. I am lucky to have two great daughters and four wonderful grand- children, but I do wonder if it was my blundering attempt at parenthood or blind luck that built that success. Some parents are too hard on their kids; others too lenient. Some kids are hard workers others enabled and codependent. The problem is that enabled employees whether they are your kids or not are just, well, bad employees. A good employee whether he or she is our child or not expects to be promoted and make more money. So here is the problem, high-performing kid or low-performing kid. What to do? LOW PERFORMER That is the toughest situation and the hardest to deal with. Whether the employee is your child or a nonrelative employee, the results will be the same. Here are some guidelines for dealing with a low-performing son or daughter. • The son or daughter must follow the rules like everyone else. If you have a 14 • October 2012 APC unning a small business is stressful. "late three times and you're terminated rule," family members are subject to it. Family members do not have diplomat- ic immunity and should be subject to the same penalties as everyone else. • Do the math. Having a million dollar- a-year business with three children working in it is probably not a realis- tic goal. Be realistic about how many families the business can support. • Ask yourself the question "If this per- son were not my child, would I fire them?" If the answer is yes, you are not doing your child a favor by not termi- nating him or her. When you are dead and gone, the last thing you want is for them to be 50 years old, jobless and clueless. • An employee development plan must be worked out. Lay out a series of goals and sequence the steps and skills employees need to reach the desired level. Keep it simple. If the goal requires more than five steps, break it into two goals. • Don't be disillusioned about the reali- ties of whether your child will be able to take over the business one day. If he or she is mostly an office jockey and has little technical knowledge, it is not going to work. If your child is a glori- fied foreman and has no desire to learn the business side of the business, that also will not work. Start small and move toward minimum standards of skill in all business areas. • Never leave two siblings in the busi- ness, when their tasks are not of equal value, with the illusion they are both going to run the place one day. Gener- ally speaking, value in contracting is built through production and sales activities. Having a bookkeeper role for one sibling and a sales/project manager role for the other is a formu- la for disaster. • Understand that as kids mature, so do their lives. Two brothers may get along great now, but add a couple of wives with different expectations and family culture and you have a much more complicated scenario. HIGH PERFORMER I am seeing more and more trends where relatively young owners and young high-performing children are creating another issue. Mom and dad

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