Episode
264
Tue, 08 Oct 2024 08:00:00 +0000
If you're running a family business, one of the toughest decisions you'll ever face is figuring out how to pass it on to the next generation. Whether it's your kids, a sibling, or someone who's been by your side for years, ensuring a smooth transition can be a minefield. But it doesn’t have to be.
In this episode of Profit Tool Belt, Dominic Rubino chats with Greg DeSimone, President of Catapult Advisory Group, who specializes in helping business owners navigate family transitions. Greg shares insights on how to pass on a business in a way that keeps both the company and the family intact.
First things first—Greg emphasizes the importance of making sure your business is actually transferable. Many family businesses are so dependent on the founder that the moment they step away, everything falls apart.
Think about it: If you leave and the customers, suppliers, and even employees only trust you to get things done, you’ve got a problem. Your business needs to be able to run smoothly without you. That means setting up systems and delegating responsibilities long before you hand over the reins.
You might think passing on a business is all about finances—and sure, that’s important. But according to Greg, the biggest challenge is communication.
Take a moment to ask yourself:
Greg talks about the need for open conversations. Whether it’s a parent-to-child handoff or passing the business to a trusted employee, clear communication is essential to avoid misunderstandings.
For example, are you ready to walk away entirely, or would you prefer to stay involved in some capacity? And does your successor even want the responsibility, or are they taking it on because they feel obligated? These are tough questions, but ones you need to address before making any moves.
Family businesses are notorious for creating tension, especially when there are multiple siblings or family members involved. Greg has seen it all—one sibling working in the business while another has no interest but still expects a fair share when the time comes.
The key? Get everyone on the same page early on. Whether it’s a clear financial plan for those who aren't working in the business or an agreed-upon role for the successor, transparency is crucial. This prevents resentment and ensures that family gatherings stay about family, not business squabbles.
Another common issue Greg addresses is when the next generation simply can’t afford to buy the business outright. Maybe your son or daughter doesn’t have the funds to purchase the business you've built from the ground up.
Greg offers solutions here, too. Through creative financing structures and flexible payment plans, you can set things up so the new owner can step in without being financially overwhelmed. And remember—just because your successor is family doesn’t mean they shouldn’t go through the proper business training. Leadership and financial literacy are key to ensuring they don’t just take over, but take the business to new heights.
Here’s a big one: ego. It’s tough for a parent who has built a business to step back and watch their child take over. You might think, “I know how to run this place better than anyone.” Meanwhile, your child (or other successor) might be itching to make changes.
Greg suggests that both sides need to come to the table with respect and a willingness to compromise. Just because you did things one way doesn't mean it's the only way to succeed.
At the same time, for the next generation stepping in—don’t try to change everything at once. A measured, gradual approach to implementing new ideas will help smooth out the transition and ensure the company stays stable during the handover.
Greg stresses the importance of starting early. Transitioning a business isn’t something you can rush. From creating a succession plan to training the next generation, these things take time. The earlier you start planning, the more options you’ll have when the time comes to step down.
Also, don’t put all your eggs in one basket. While your dream may be to pass the business to your kids, life happens. They might get a better offer elsewhere or realize they don’t want to run the family business after all. Keep your options open in case you need to sell to a third party down the road.
At the end of the day, family business transitions are about more than just handing over a company. It’s about ensuring your family relationships stay strong while preserving your legacy. By planning early, setting up systems, and keeping communication open, you can pass the torch to the next generation without burning any bridges.
Want to dive deeper into this topic? Listen to the full episode of Profit Tool Belt for even more insights from Greg DeSimone on how to transition your family business the right way.
Episode Title: Family Business: How Do I Pass this On to My Kids? with Greg DeSimone
Guest: Greg DeSimone, President of Catapult Advisory Group
Summary:
In this episode of Profit Tool Belt, Dominic Rubino sits down with Greg DeSimone to discuss the challenges of passing a family business to the next generation. Greg shares practical strategies for ensuring a smooth transition, from preparing your business to be transferable to managing family dynamics. Whether you’re thinking about passing your business to your kids, a trusted employee, or selling it outright, this episode is packed with valuable insights.
Key Takeaways:
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