What do you do if you're still considering passing it on to them? I think the best way to do it is to run your business as though you're planning to sell it to a third party.
In that case, you need to transition your business from one that draws on your personal experience and customer relationships to one that can run without you. It's not until you have a business that runs on autopilot that you have the full catalogue of options available to you: pass to your kids, sell or install a CEO, and kick yourself upstairs to the chairman's desk.
The more technically complex the services and products are that you sell, the more your employees (including your offspring) will need to turn to you with questions. Start the journey to becoming sellable by identifying and offering a set of simple products or services that will allow your kids to run and grow your business without having to turn to you for advice. In short, you need to focus on products and services that scale.
Scalable products and services are the ones you can teach others to deliver and sell, that are valuable to your customers and that are consumable so those customers need to return regularly, providing your business an annuity not reliant on your rainmaking.
Compare and contrast the typical small, independently owned moving company with PODS. The small mover relies on the know-how (and muscles) of the owner. The owner writes the most accurate quotes because he's been doing it for 30 years. He can walk into a three-storey home and know exactly which furnishings will pose a problem and how long the job will take. He knows how to get couches around narrow staircases and what to do if something breaks in transit.
The owner's son comes along and wants to join the family business. The father is proud, and his back is tired, so he hands him the keys in return for a share of future profits. The problem is, the father can't teach his son a lifetime of lessons in a few weeks. The son needs to make his own mistakes quoting jobs and getting couches stuck until he develops his own eye. Maybe the son doesn't have the same passion and drive to succeed. Given all of the education his father bought him, he's got options and he eventually decides maybe the family business is not all he thought it would be. He flounders, pulls the plug and becomes yet another statistic in the world of failed family-business transitions.
Now imagine if the father decided to approach the moving business by identifying a service that scales because it is teachable, valuable and provides a long tail of revenue. He might have imagined a company like PODS.
PODS has reinvented the moving and storage business into a scalable model. Before PODS, when you wanted to remodel your home or move, you would rent a storage locker somewhere in the suburbs, rent a van for the day and schlep all of your stuff up to the storage unit. You'd inevitably forget things and have to make multiple trips back and forth.
PODS drops a container on your driveway and allows you to fill it up with your things. You lock it and call PODS when you're ready to have the unit picked up and/or stored.
PODS has a business that can be taught to employees with relative ease: you don't need a sharp eye for angles and corners, all you need is a truck driver to drop off the unit and some administrative staff to take customer orders and organize the storage facility — all relatively teachable tasks compared with the art of quoting a moving job.
The PODS service is valuable to customers because it eliminates multiple trips to the storage facility. PODS has an annuity stream of recurring revenue because a percentage of people who order a unit choose to store it long term in the PODS storage facility for a monthly fee.
In short, PODS has taken a fresh approach to the moving and storage business, and instead of being reliant on the owner's hard-earned experience, it can be run by relatively inexperienced employees. It's a sellable business.
Once you focus on a single service or product that scales, your business will become a lot more fun to run, which will go a long way toward improving your kids' motivation to sign on. A lot of kids get turned off the family business because they watched the toll it takes on their parents. If you spent your teenage years listening to the trials and tribulations of company building, would you be eager to sign on?
Start by implementing changes in your business that make it more scalable and fun to run. Your kids will see you working less and enjoying life more, and they'll want in. Then you will have the best of all worlds: a business you can transition to your kids if they're keen or the ability to sell to a third party if they're not.
Special to The Globe and Mail
John Warrillow is the author of Built To Sell: Turn Your Business Into One You Can Sell . Throughout his career as an entrepreneur, Mr. Warrillow has started and exited four companies. Most recently he transformed Warrillow & Co. from a boutique consultancy into a recurring revenue model subscription business, which he sold to The Corporate Executive Board in 2008. He is the author of Drilling for Gold and in 2008 was recognized by BtoB Magazine's "Who's Who" list as one of America's most influential business-to-business marketers.