Prepare Your Heirs! You need successors to help carry out your dream

adapted from Beyond Survival by Léon A. Danco

A working lifetime isn’t something infinite, stretching from childhood to senility. It’s something like 600 months.

That isn’t much time, and in most cases there isn’t that much left. It’s more like 300 or 400 months. That is why it is important that the owner manager take a conscious approach to leaving behind what they know. They’re really in the same business as a teacher, but don’t often realize it.

The teacher and the owner manager have the same responsibility – to pass knowledge on to those who succeed them. The owner manager needs people around who will help carry out his dream – that the business will continue in true value after they’re gone. These people are his students.

Share your world with your people and invite them to expand theirs. Learn together. Don’t send them out to learn something and dismiss it on their return.

The Present is Prologue

We cannot invest, protect and shelter ourselves against a world in which the younger generation will prevail. We have a responsibility to see that the world in which we will end our lives is well run by those who follow. We do this with our children, so that they are raised as good citizens. We do this with our country as we participate in various community activities. We do this with our society as we take care of those who are less fortunate. We must also do this with our economic creation, because that which we created we are responsible for. I encourage you to teach what you know to those who will inherit your creation.

I’ve heard many founders of family businesses express their frustration with the lack of ability or commitment from their heirs. In my experience their lacking has a direct correlation to the founders approach to the training of their successor(s).

Too often the approach is baptism by fire as opposed to a well-planned coaching and training strategy. And mistakes are viewed as failures instead of learning experiences.

Meet with your successor(s) and explain the common long range plans. Talk about the challenges and dreams, to discover what they need to learn and understand. This is the role of the educator. I see it as mandatory that you become teachers to your successors and that you use your advisors as faculty who can assist you in this teaching job with their unique professional tools. This is the purpose of education ‑ to expand a person’s world.

The Language of Business

Included in any curriculum for potential presidents should be a thorough understanding of finance. This means teaching a true understanding of financial matters ‑ a knowledge of such things as profit centers, sales forecasting, return on investment, ratios, cash flows and working capital issues ‑ the list is endless.

Accounting is the language of business; it is the way in which information is transmitted from one business person to another. There is a useful way of presenting data. As business manager’s become more proficient in using accounting methods they become clearer in the presentation of essential data relationships. They find themselves better able to explain and justify both organizational and financial concepts. They can clearly plan for and intelligently converse about the future of their business. They can articulate their goals to those who need to know – bankers, partners, and heirs.

The owner‑manager concerned about training a successor must learn to rely on managers and/or outside directors as the doers as they take on the major responsibility as co-teacher of the heir. From the moment they realize the all‑consuming nature of this task, they also realize that there is never enough time left…that too much of their knowledge of the operation is written in their mind and it must be transcribed in an orderly, usable fashion for the successor to find it of value.

In whatever time that remains to the owner, there are steps that they must take to perpetuate their dream through the family business. As they discover that the true glory of the teacher comes in the achievement of their students, they will approach this new challenge ‑ as tutor to the heir(s) with the same vigor and excitement that built the original business.

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace.For more information you can follow him on Twitter @JimYih or visit his other websites JimYih.com and Clearpoint Benefit Solutions.

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