Hubler For Business Families

When Clients Step Down from the Business They Started - Part One

Advisors can help successful entrepreneurs with the hard choice of leaving the top spot

Key Takeaways:
  • The decision to step down and retire is one of the hardest a family business entrepreneur ever makes.
  • When the time comes, entrepreneurs don't have to retire and leave their companies. Instead, they must change their job description.
  • Rather than undermining the new leader's authority with their continued presence, founders should become the architects of their company's new ownership, management and leadership systems.
  • Stepping down is not quitting - it's leading from a new perspective.

I start this article with the tale of Jim, an entrepreneur who started his family business, and Robert, the nonfamily member Jim hired when he decided to step down. Jim had a son who was not quite ready to take over the business, so he asked Robert to run the company and train his son.

All the right intentions
Jim was rightfully proud of his company. He had nurtured it from a garage start-up to an enterprise making $40 million annually. To ensure a smooth transition, Jim met monthly with Robert, his new president, to review the company's performance. At one such meeting Jim noticed Robert's last item on the agenda: "Jim's Schedule." When they got to it, Robert said, "Jim, if I'm going to be successful around here, you can't be here as much."

Jim felt his face turn ashen. In shock, he thought, 'What will I do? The company is my life.' Then he thought about his hobby farm and his boat on Lake Michigan and decided, 'I'll be fine. I have plenty to do.'

A few months went by. Jim was having another monthly meeting with Robert, and the last agenda item again was "Jim's Schedule." When they got to it, Jim said, "Well, Robert, at least I'm doing a better job of not being around as much." Robert shook his head slowly from side to side.

Jim realized it was true. Although Jim wanted to turn his attention to his hobby farm and boat, he couldn't do it. His continued presence in the company undermined Robert's leadership. Jim could not, in his mind, "quit" the company.

The decision to step down and retire is one of the hardest a family business entrepreneur ever makes. But entrepreneurs don't have to retire and leave their companies. Instead, they must change their job description. Jim should become the architect and designer of new ownership, management, and leadership systems. He should be the lead family member to organize and build consensus on family values and family philanthropy. He doesn't have to quit; he must lead from a new perspective. (For more specifics on this philosophy, see my article The Last Challenge of Entrepreneurship, parts one and two.)

As rewarding and manageable as this approach seems, it appears to be easier said than done. In my 30 years of consulting with family-owned businesses, I have seen many entrepreneurs who failed at the "letting go" process - the last challenge of entrepreneurship.

There are likely as many reasons for failure as there are reasons for entrepreneurs struggling to pass businesses on. But in my experience, the breakdown tends to come from a failure in communication. I'll share examples below.

Real-world examples
Don't forget a key player in the business succession plan: the spouse. A company once hired me to do its succession planning. The company's accounting firm had taken the lead on the technical side. The accountants created a tax-driven plan that would save an enormous amount of taxes. It allowed Allan, the entrepreneur, to retire immediately and to winter in Arizona.

I was invited to the briefing in which the accounting firm presented the succession plan to Allan. Although a bit surprised by it, Allan quickly warmed to the idea of spending his winters in Arizona. Allan's wife, Helen, was not at the briefing.

Next, the accounting firm presented the logic, the tax savings and the value of the agreed-upon plan to a wider group, including Helen. Helen's response was definitive. She slapped her hand on the table three times as she yelled, "I'm too young for my husband to retire!" That ended the discussion. Allan did not retire for another five years.

Here is a second example on the same theme. As part of my succession planning process, my client, Roger, shared with his family his dream for life after leaving the company: He looked forward to playing golf in Florida for four months every winter. Roger Jr., Roger's highly capable son, was ready to take over the company. He supported his dad's dream.

Roger's wife's responded, "That is fine. I will be happy to come down and visit a couple of times. But our grandchildren, our friends and our church are all in Minnesota. You can go to Florida, but I'm staying here." The succession plan stalemated because Roger and his wife had not talked things through.

I believe that every couple involved in a family business has already made an implicit contract in their relationship concerning that business. It may be unspoken and implied as they take on roles to meet the needs of the business. By the time the couple is in their sixties and certainly their seventies, however, they need to be more explicit about their expectations. They need to be specific about what they expect for the future and not merely assume that their partner knows what they expect.

Both spouses need to share their individual "new" dream and include the coming generation as part of that dream. They must work together to support the transition, determine their new job descriptions and communicate their intentions.

This makes sense when you realize that entrepreneurs by definition are driven by their dreams. When they move on from being the family business driver, they are most successful by developing a new dream relative to work, family, relationships, money/wealth, leisure time, health, community service and spirituality. I call this process Life Career Planning. Part two of this series reviews the Life Career Planning process and its benefits.

If you enjoyed this article please consider leaving a comment below, sharing it and/or subscribing to have future articles delivered to your RSS feed reader.
blog comments powered by Disqus
click edit icon to configure CONTENT-SMICONS element

Management and LeadershipWhen Clients Step Down from the Business They Started - Part Two
As couples get older and start to consider retirement, many realize how little they understand about each other's dreams and values for the next stage in life. Read More
When Clients Step Down from the Business They Started - Part One
The decision to step down and retire is one of the hardest a family business entrepreneur ever makes. When that time comes, entrepreneurs don’t have to retire and leave their companies. Instead, they must change their job description. Read More
Formalize the Love in Successful Family Businesses - Part Two
It's not unusual for family businesses to put off dealing with issues as a way to maintain family unity. Unfortunately, that approach usually backfires, as we saw in this case study....
 Read More
Formalize the Love in Successful Family Businesses - Part One
How structure and shared vision can prevent family rifts from undermining a thriving enterprise Read More
The Power of Gratitude - Part Two
In Part 1 of this article series, we discussed how lack of gratitude is the single biggest obstacle to succession planning. Here, we'll explore how the philosophy of gratitude can help family businesses and the advisors who serve them. Read More
The Business of Gratitute - Part One
Why is it so important to learn gratitude, not just voice it? Because at that level it is a business asset. In my experience, the single most troubling obstacle in family-owned businesses is that appreciation, recognition and love are so rarely expressed.  Read More
The Last Challenge of Entrepreneurship - Part 2
Part 2 - Concluding a series focusing on succession planning Read More
The Last Challenge of Entrepreneurship
Part 1 of a two-part series focusing on succession planning Read More
Family Businesses - The Trust Paradox - Part 2
How families create formality and structure in their businesses as a way to promote trust in the family as well as in the business. Read More
Family Businesses - The Trust Paradox - Part 1
Trust is provocative, paradoxical and implies risk Read More
The Trust Paradox of Family Businesses
Trust is the central component to the development of a family firm's social capital according to Pearson and Carr's "The central role of trust in family firm social capital". Their work raises the questions of what trust is and how to sustain it as the family business evolves. Over the past 30 years I have worked with family businesses in the area of transitions, succession planning, and managing what I describe as emotional breakdowns of trust in either business or family relationships. As a result, I believe building trust in the family and in the structure of the business are mutually beneficial to family harmony and a successful family business. Read More
Family Business Consultants as Leaders
Working with family businesses as a consultant is one of the most awesome responsibilities I can imagine. It incorporates managing family issues and concerns as well as business issues and concerns and the interrelationship between the two. The impact of choices made by the consultant can have far-reaching effects for both family and business that can impact generations of family members. Read More
Do Family and Business Meet or Collide?
The way we see it, the overlap between family and business is an organizational problem, but people within the family business experience it as an interpersonal issue. That's why family members commonly blame each other for the situation. Read More
When the Business of Your Family is Business
The defining qualities of a business contrast starkly with those of the family. While a family is nurturing, a business must be productive. It values competency and candor in order to embrace change and create success. Of course, the skills and sensibilities of business can play a positive role in your family. Business discipline and financial savvy, for instance, positively influence families and their success.
 Read More
Is it a Family-Run Business or Vice-Versa?
The family-run business faces unique obstacles. Business differences can tear apart families because the family and business have different (even opposing) goals. While family is protective and loyal with strong emotional ties, these positive qualities can lead to resisting or minimizing change in a business setting. Read More
Understanding Both Sides of Family Business Management
To help you understand the issues of family business management, we've developed a working model of the family business. It consists of two intersecting circles. The first represents your family; the second, your business. Read More
Family Members Entering the Business Checklist
Family businesses are all about the family, yet major heartaches can occur when next generation adult children enter the business. Read More
Changing the Generations in a Family Owned Business
Here is my list of ten important things younger generation adult children can do to smooth their transition into leadership in the family-owned business so that everyone involved feels positive and vital. Read More
Learn More and Get FREE Resources

Now Available:

Cornerstone of Hubler for Business Families:

The Soul of Family Business


Take this risk-free first step in ensuring the continued success of your family business now. There is no charge for the orientation meeting other than out-of-pocket expenses for travel. 


Does your family business need help with succession planning, conflict resolution, management or other issues? If so, we'll arrange a one-on-one orientation meeting with you and Tom Hubler to help you explore the possibilities of working with us. If you choose, your family and business associates can also attend. Here, in a relaxed environment, you can talk about:

- Key family business issues
- Plans necessary for the success of your family-owned business
- Possibilities and expectations
- Terms of the relationship
©All Rights Reserved | Hubler for Business Families - America's preeminent family business consultants
Ownership Planning | Management and Leadership | Business Planning | Family Planning
Contact | Site Map