4 tips for passing your business to the next generation

The reason people blame things on previous generations is that there's only one other choice!—Doug Larson.

For millions of older business owners, the next major event in their lives will be selling or passing on the companies they have founded and grown. In almost every case, that transfer of ownership will be to a different generation.

Since most of these owners are Boomers, or those a little older, the new generation of owners will most likely be from the GenX/Diversity Generation, born between 1964-1981 — the first generation in American history to truly live diversity in their early core value-forming years.

"Let's meet" vs. social media

Today's business owners talk about the differences between themselves, their children, and non-related younger leaders in their companies. Among their concerns are: "I don't understand their work ethic. What is all this social media about? Don't people just meet in person anymore and figure out how to solve problems?"

Younger potential successors often ask, "Why does it take so long to get things done here? What is all of this process stuff about? Why should I be asked to take a big risk with my career? What specific skills will I take with me if I have to leave this company?"

A father who was trying to pass his business on to his son described the generational differences in this way: "For my son, the business experience seemed like a sprint; for me, it was always a marathon experience."

Financial risks and rewards

Here are four important tips regarding transition and the next generation:

1. Those of this "daycare" and "divorced parents" generation often put family and friends ahead of work and business

They often spent a good deal of time alone as children and relied on their peers for social and emotional support. It is not surprising that many younger managers are willing to sacrifice financial rewards for the sake of maintaining their family and friend relationships. During the transition, owners need to respect this generation's concern for family, especially time spent with their children.

2. The Gen X/Diversity generation tries to differentiate between having a strong work ethic and "workaholism"

Many have seen their parents as workaholics, and the results have not been particularly good for them. They do not have the same sense of loyalty that the older generation has had to an employer. Business owners in transition need to understand that work ethic varies with each generation. Members of the Diversity Generation work very hard but prefer to work on their own as long as they know that they're being held accountable. Their sense of mission might be different from the owner's, but they do have a sense of mission.

3. The younger generation loves technology and believes in "high tech, high touch"

This can be a real benefit for the future, given our society's acceptance of technology as a primary business delivery platform. As an owner in transition, be sure to place a fair value on this generation's knowledge of technology and information systems.

4. When it comes to financing an ownership transition, business owners and their trusted advisors might meet their greatest challenge.

"This younger generation is often not willing to invest its own money in business opportunities," says Steve Coleman, my co-author of Find What's NEXT For You: Business Owners Share Their Transition Stories. "These young entrepreneurs are not opposed to financing if they are in the business, but many do not trust bankers and complicated financial deals. I recommend that owners find someone closer in age to their next-generation successors to help develop the buy-sell deal."

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