Edition 532 – Gradual Departure
Dad started the business 40 years ago. He and a mate join together and decide to give it a go. They’re working for a large organisation and not that enamoured with the pay, the conditions or the lifestyle. Plus, living where they live, each with a young family, it seems they never see their babies become toddlers, become school-age children.
The early years are tough. Late nights. Weekends. It’s hard going, yet they each still slog away at it, to build something for their families, for the future.
Cash turns tight. Old contracts drop off. New ones come on; however, they involve borrowing for equipment and training staff in new services. There’s the ideal that they’re doing this to build a better life. However, right at this moment, it’s still long hours and sleepless nights. In spite of the challenges, they’d never go back. This is now the life they’re building.
Twenty years in, and things are going OK. There’s money in the bank. Their superannuation is building. Mortgages are under control, and those school-age children are fast leaving school. There’s talk of one or two of them coming into the business full time. Not on a free ride, mind you. Right on the first rung of the ladder. On the tools, which is hard, demanding work.
Bubbling in the background, the two mates are dealing with their relationship with each other. They don’t get on as well as they once did. It’s not that they’re outwardly fighting each other. More than anything, they’ve grown apart in a business sense. Each has a very distinct part of the business they look after and nurture. However, whilst they’re not getting on, the business turns a little bumpy, as it always does, when people aren’t getting on.
A business divorce ensues, with each taking their own client base. It could have turned ugly, but sage advice and a mutual feeling that any separation can be win-win for both of them means there’s a strength to the decision that wasn’t possible when they were together.
In the first year of the new venture, the business smashes all profit records. Astounding, and proof that when the distractions of life can be dealt with, small and family businesses grow from strength to strength.
Gradually, adult children grow from being feet on the ground, to brains at the table. They come up with ideas about refreshing the business, to take it forward over the next 20 to 30 years. Dad’s control-freak nature loosens a little, as he realises the effort that he and his wife invested in raising their children is producing results. He reflects that in order for them to continue to grow, he himself needs to step back, let them make decisions and, from time to time, get it wrong. Not catastrophically so, but just enough where they can appreciate their own limitations. Often, we learn more from our mistakes than our victories.
To today, where at 75 plus, Dad is still involved in the business most days. The adult children have taken the reins and driven the business forward, such that it’s now more than twice the revenue and four times the profit it once was. Dad is still consulted, not on the day-to-day stuff, but more as a sounding board. At times there’s some head-butting, as Dad’s conservatism and the memories of the days when they struggled come up against the current management team, whose struggles are different, but not.
He’s spent the past 10 years winding down. Chances are, it’ll be another 5 to 10 years before he’s completely exited the business. That’s 20 years of a gradual departure. Which is good for him, as he can’t ever think of stopping work completely, and good for the business, where he’s assumed the role of the sage.
This Week’s Tip
“The most successful generational transitions in family business take at least a decade to occur, and at times, longer”.