Case Study: 12 Rules for Becoming a Successful Business Successor

Just because you’re ready to take over the family business doesn’t mean your predecessors are ready to turn it over to you. That is the message I have delivered to more than one successor; most of the time it’s because the successor isn’t trained and is not qualified. But sometimes the reason the transition doesn’t take place has nothing to do with the successor’s training. Sometimes it’s just because the successor doesn’t know how to be a successful successor. Here are 12 rules for the successor.

How Much Brass?

The general was having a staff meeting. The lieutenant on the back row spoke, “Excuse me, general. But what you are saying is not exactly the way I see it. I think you should…” The general nodded and continued.

A few minutes later the lieutenant spoke again. “Excuse me, general. The idea is good, but you’re ignoring the new technology available to us. I think you should . . .” The general was fuming underneath the surface.

A few moments later, the inevitable happened. The lieutenant spoke again. The general blew. “Lieutenant, why must you disagree with everything I say?”

“Well,” the lieutenant said confidently, “I want to get ahead, sir. And I know you didn’t get where you are today by agreeing with your superiors. Fact is, I know you have had your own ideas and spoke your mind.”

“Yes,” the general responded with his voice lowered, “I didn’t get to be a general without having my own views, expressing my own point of view, and confidently discussing issues.”

“See, that’s my point.” the lieutenant said smugly.

The general continued, “But, that’s sure as hell how I made captain, lieutenant.”

A Matter of Timing

Just because the successor is trained and capable of taking on additional responsibility, if not the business, doesn’t mean it is time.

Before you can be a good general, you have to be a good enough lieutenant to be promoted to captain. And that boils down to the predecessor’s confidence in the successor. Instead of being the impetuous lieutenant, be a good vice president.

Some would insist that my concept is closely akin to sucking up, and why would anyone want to do that? Well, does the successor have $500,000 to pay the predecessor? That’s what the business is worth. The answer is no. The answer is always no. However, if the answer is yes, then pay the predecessor the $500,000, take over the business, and don’t read any further. You don’t need to know how to suck up…er…be a successful successor.

If, however, you are trying to get the predecessor to loan you $500,000 so you can purchase the business from them over time and pay them back with the proceeds of the business, then you do need to know how to be a successful successor.

Yeah, I know that the predecessors (often parents) didn’t know much about business when they started the business. But no one gave them a business doing $1 million in sales, with 10 workers whose families’ livelihood depended upon the skills of the person running the business either.

They risked everything and perhaps that was because they didn’t have anything to lose at the time, but they took the risk and succeeded. You, as successor, have that option open to you. If you want to go do it, have at it. But don’t come whining that your parents ought to give you their business because you happened to pop up in the lucky gene pool. No, you’ll have to do it the old fashioned way—earn the opportunity to succeed by first becoming a successful successor.

The 12 Rules

In an effort to make the time the successor serves as the understudy happier and more productive, I offer the following sucking up concepts.

1. The business leader must select, train, and install their successors in their lifetime (Dr. León Danco, “Inside the Family Business”, Center for Family Business, Cleveland, OH). And I add that it is not enough to just be a member of the family. It is up to you to prepare yourself so you are the most logical person to be selected. The predecessor must train, but you must also be willing to be trained. If you are not trained, the leader must move on to select someone else or sell the business outside the family.

2. There can be but one leader of a business at a time. A leader cannot retire in place. Leaders do not prepare their successors by stepping aside yet staying at the helm. This frustrates successors and infuriates predecessors. This is a rule that is often broken.

This conduct can lead to no one directing the business and no one taking responsibility. The ship is adrift and the pilot is teaching the first mate a lesson by running the ship ashore. Good job. The leader must remain leader until the next leader takes the helm. To do less is to abdicate responsibility.

Or this conduct can lead to the successor pretending to run the business. “I do everything but the checkbook. Dad still does that.” This is not preparation. This is “playing business”. Further, giving a successor checkbook responsibility and then taking it back as punishment is a sure way to kill a transition.

3. The successor cannot make decisions for the predecessor regardless of the righteousness of the position; regardless of what the successor knows that the predecessor doesn’t. The predecessor is in charge until the successor is in charge. Until then, the successor advises and assists. One person, and one person only, can run a business.

The successor must understand the concept of under command. The successor is under the command of the predecessor. The successor would be wise to begin ideas, changes, and solutions with the phrase, “With your permission...”

4. It is impossible for the successor to join the business with the understanding that they are not going to be “working” for the predecessor. It is not possible for the successor to “share” power or do part of a function. It is only possible for the successor to be assigned a real function (job) and then to do it to the very best of their ability just like everyone else within the organization.

5. The leader is responsible for the results of the business. In family-based businesses, we founders rip the assets from the family and put them into the business. Therefore, we are responsible for returning to the family more money and more time than we would otherwise. And if we are not doing that, then we need to fix it so it happens, or we need to go get a real job. The successor needs to be part of this performance-oriented concept and not be a drain on performance.

6. The leader (predecessor) assigns authority to all individuals within the business. The leader assigns to you your job. You have no more authority than what the leader assigns to you. Your first duty is to assume the responsibility of the job you have been assigned. Do your job better than anyone else has ever done. And do it with enthusiasm, loyalty, and eagerness. You do not have any more duties or authority until assigned by the leader.

7. It is from assuming responsibility for your assigned tasks that recognition and more authority are assigned. Those not stepping up to the responsibility of tasks already assigned can never be expected to receive additional authority. It is this gradual earning of authority from the predecessor that the successor gains the confidence of the predecessor to succeed them.

8. It is as important to earn the confidence and acceptance of the other workers within the organization as it is to earn the confidence of the predecessor. Assuming responsibilities for tasks not yet assigned will be met with resentment, confusion, and conflict not only from the predecessor, but from other workers as well.

9. You must know more than the predecessor must know about different things. You are probably more academically qualified than the predecessor. But, that does not mean that you know what the predecessor knows. So, knowledge of things other than what the predecessor knows is not enough to allow you to gain authority. You will gain the confidence of the predecessor and authority by learning what the predecessor knows and practicing their work ethic.

10. The predecessor sets the work ethic of the organization. It is not up to the predecessor to accommodate the work ethic of the successor; rather it is up to the successor to adopt the work ethic of the predecessor.

You are not able to change the work ethic successfully until you adopt and learn the old work ethic. If the predecessor comes in early, you come in early. If the predecessor works on weekends, then you work on weekends. These tasks are not entirely necessary to run the business, but these tasks are necessary to gain the confidence of the predecessor.

11. The successor must have specific technical knowledge gained by serving in various functions (jobs) of the business. In doing these jobs, the successor has no more authority than anyone else serving in these jobs. It is through the development of the technical competence of the organization that the successor is best prepared to lead. A leader who does not understand the work of those led remains a poor leader forever.

12. It is the successor’s job to accommodate the predecessor; it is not the predecessor’s job to please the successor.

And there they are—12 concepts for the successor to consider. I don’t think they can be ignored without adverse consequence.

Tom Crouser is principal of Crouser & Associates, Inc., 4710 Chimney Drive, Charleston, WV 25302, www.crouser.com or call 304-965-7100. Tom works with businesses undergoing an internal transition of ownership, either among family members or people who work in the business, and welcomes your inquiries. Contact him at tom@crouser.com and read all of his posts at www.tomcrouser.com. He also tweets business topics from @TomCrouser. You can find Tom on Facebook by searching for “Business with Tom Crouser.”

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