Some of the most famous and successful businesses are family businesses. Consider the media conglomerates built by Rupert Murdoch, Hugh Hefner, and the financial empire of Donald Trump. These high-profile businessmen have managed to keep their companies strong, in part, by involving their children in the administration of their business. But the family that works together does not always keep the business together.
Take the example of U-Haul. The Schoen family turned U-Haul into a small business run from the family garage into a leading nationwide transport service. However, conflicts between the Schoen siblings led the company into Chapter 11 bankruptcy. So what separates successful family businesses from those that flounder and fail?
Succession is a crucial issue. For those family businesses that stumble, the vulnerable period often comes when the older generation turns control over to the younger one. Sibling rivalry can create bitterness and resentment among the major players.
Successful family businesses negotiate the tricky issue of succession by keeping issues of family and business separate. A business owner may be tempted to hand the reins to the oldest sibling because that seems most "fair". However, catering to the vulnerable egos of one's children can be deadly to the continued health of a family business.
In a successful family business, control of the company is handed over to the family member with the greatest desire and aptitude for the job. Rupert Murdoch has chosen his younger son James as successor over his older brother Lachlan, who was once the heir apparent.
Despite the public's romanticized view of the father-son relationship, a smart businessman does not let gender deter him from doing what is best for the company. Hugh Hefner turned Playboy Enterprises over to his daughter Christie, and Sumner Redstone of NewsCorp passed over his son for his daughter Shari when choosing a successor.
Kids should be favored in the home. In a successful family business, however, the CEO's children are subject to the same meritocracy as everyone else.
Children should be actively involved in the business from a relatively early age and given the opportunity to prove themselves. Donald Trump realizes this; that is why his children play such a high-profile role in company operations. Trump's children are subject to being fired, just like everyone else. Under no circumstances should the company business be foisted upon a child who does not want it.
Successful family empires put the business before family pride. It is better to hand the company over to a cousin or in-law than to a son who wishes to pursue a different career.
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