I was thinking about the topic of entitlement the other day as it relates to the family business. Having the opportunity to join the family business is an opportunity that few children seem to take advantage of. Often children see their parents work very hard for a long period of time to get the business established. As a result they either don’t want to work as hard as their parents or often feel entitled to the goodies the business provides, but not have to work hard to deserve those goodies.
Parents often feel guilty for the amount of time they’ve spent building the business. To make themselves feel better parents will sometimes not put requirements for their children around material objects. If this is done to an extreme basis this can lead to a feeling of entitlement by the children. This entitlement can become a problem if the children join the family business.
Having a culture of entitlement with your children at home can cause problems if the children join the family business. This is especially true if the parents are going to depend on the cash flow from the business for supporting their lifestyle in later years.
Some of the issues that entitlement in the family business can cause are:
Your key people may leave. It’s hard enough to attract, train and keep really good key people. If these people see you treating your children differently than they are, your managers might decide to leave for greener pastures.
An inappropriate message is sent through the company. If your children feel and show that they are entitled to work in the company whether they produce positive results or not can seep through the entire company. If your children set a bad example, the rest of your employees might be encouraged to follow their lead.
You might have your cash flow disappear. If you allow your children to take over the business with an entitlement attitude, they could run the business into the ground and you wouldn’t know it. If you’re depending on the business cash flow for your living expenses this could become a large problem.
The real business issue is not about your children being entitled, but the rules you set for them to join your business. I strongly recommend that before you let your children work with the golden goose (your business) you set hard and fast rules about what it takes to first join the business and second take on more responsibility within the business.
Family businesses that think these through will often have a better chance of passing the business and continue providing cash flow for the senior generation.
As always, I’m interested in hearing your thoughts. Please email me at Jpatrick@stage2planning.com to let me know what you think.
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