Business consultant Jon Goldman made a number of predictions at the recent National Wooden Pallet Container Association (NWPCA) Annual Leadership Conference. One really stuck out to me given the current situation in my own business as my boys prepare to assume control of the company.
Goldman said that the sale of businesses will rise significantly as Baby Boomers retire and the next generation of family business leaders take over for their parents and older siblings. He mentioned that over the next ten years, nearly seven out of ten business owners will sell or transition the ownership of their businesses, which is the largest exchange of business control in the nation’s history. Baby Boomers are reaching retirement age at the rate of 10,000 per day according to the Pew Research Center. This means some business owners need to be thinking about positioning the company for the future, getting it ready to sell or training the next generation to take over the day-to-day operations.
Although this transition trend has been around the pallet and lumber industries for years, it seems to be a growing reality when you visit the NWPCA’s big annual meeting. A few years ago, a long time pallet friend came up to me and asked, “Ed, do you know any of the people here anymore?” This is significant because this comment was made by a man who had been coming to pallet meetings all his life ever since he was a boy. I understood why he asked this because I sometimes find myself asking the same basic question.
The old guard is no longer in charge. Most of them are no longer even around. The new guard has had to learn to live and work together to build a stronger industry. All of us have had to learn different skills, particularly when it comes to communication.
At recent pallet industry meetings I have often heard people speak of the differences between various distinct generations – the Veterans, the Baby Boomers, Gen Xers and Millennials/Gen Y. People in these four generations find themselves living with each other – working side-by-side. Business roles vary widely and find themselves being rewritten daily. Generational differences, most notably modes of communicating, have distinct attitudes, behaviors, expectations, habits and motivational buttons. We need to understand these differences in order to continue developing our companies.
The key is not to assume that you know what a different generation is thinking or how it functions. You should ask questions and seek to see whether or not your family fits basic generational patterns. There is no substitute for a good dialogue, showing respect for the other person and seeking to find common ground. You need to manage expectations and foster good relationships, which requires clear communication.
The chart below explains some basic workplace characteristics of the various generations. These are just a guide and your people may not fit the norms.
Certainly one of the most difficult issues in my business life has been transition issues from the past to the present and then the future. It is hard to let go because this business has been so much of my life. Working with my two sons to plan our business future is one of the most challenging issues I have ever faced. On the one hand I am lucky because we have a tight- knit family unit that shares a deep love. We have similar beliefs and business expectations. On the other hand, we as a family have to make tough choices about roles and the future direction, and ultimately, I am the decider of what will happen to my business. Even when we share common beliefs and understandings as we do, there is still a concern any time a shift occurs in who is responsible for steering a company.
In my case, both of my sons are very skilled and could do the job. They both bring different skills and strengths, which makes my decision even tougher. Sometimes, the best way to decide is to look at previous experience as well as give various family members tasks to do that allows them to showcase their leadership ability.
A Pricewaterhouse Coopers Family Business Survey reported that 41% of family companies plan to pass both ownership and management of the business to the next generation. This means that the owner might sell to a non-family member or only allow family to assume either ownership or control but not both.
For a family business, transition tends to be a once-in-a-lifetime decision that can have profound impacts on the business and the family behind it. These decisions can be emotionally charged, and yet a reluctance to tackle the concern can hurt the health, longevity and future of a family business.
It is usually best for family members to work outside the business some before taking a major role in a family-owned company. This will help give family members more expertise as well as help them discover their talents, desires and work styles away from the family. Once these family members enter the business they should be given real responsibilities and the room to make some mistakes. This will allow them to learn how to troubleshoot problems, bounce back from small failures, etc. You don’t want to let family members make catastrophic failures. But a few mistakes here and there can provide valuable lessons.
You should not take family succession planning lightly, but many companies do not have the right practices and agreements in place to
ensure a smooth transition. It is common knowledge that only about 30% of family businesses survive into a second generation. The best way to avoid becoming another sad statistic is to start planning now. Read the article on page 20 to get a good idea of things to consider in succession plans and buy-sell agreements.
When family is involved, much more is at stake than just the business. For me, I am definitely a blessed man. The Lord provided me a business that my family could learn to cherish. We publish products that thousands of companies and individuals read for guidance. We have come to truly love our industry and the people in it. From what you have shared with us over the years, I have come to realize the appreciation that so many in the industry have for our products, family and staff. As always, I hope being open about my process will help you in your endeavor to plan for the future.
