General Business Tips
Tips for Transitioning a Sweeping Company From One Generation to Anotherby George Hedley, president of HARDHAT Presentations; adapted for power sweeping contractors by Ranger Kidwell-Ross, editor, WorldSweeper.com
I grew up in a home where my Dad was an entrepreneur. He owned, managed, built and developed mobile home parks. He worked hard, lots of hours and often from his home office. After graduating from high school, I attended the University of Southern California (Go Trojans!) so I could play on the water polo team and get a civil-structural engineering degree.
As an engineering student, I figured I would learn how to design building projects and then go to work for my Dad as a project manager after graduation. But after the graduation ceremony, my Dad didn't offer me a job! Now what? With no money and no means of support, I had to go out and get a real job, work for a real company and live on the money I earned!
In retrospect, this was the best career builder I could have experienced. I had to find a company to hire me, work within their system, do what they wanted me to do and get promoted based on my merits and contributions as an employee. Many of my college friends took the easy route and went to work at their parents' companies.
Thirty-five years later, they're still working for the family business. They complain as they continue to wait for their parents to retire or die so they can finally take over, make some real money, enjoy their lives and have some freedom; rather than living under the shadow of their parents' success. Most of them are unhappy and unfulfilled as their dream to become a partner with their parents hasn't materialized yet. They postponed their lives and personal achievement waiting for unspoken promises, oftentimes ones that their parents never communicated nor offered.
Don't Get Stuck in the "Typical Situation"
A sixty-year-old totally ran his Father's excavation contracting company for over twenty years. His Dad is eighty-five years old, has medical problems and hasn't been able to come into the office for the last five years. Twenty years ago the company was small and doing $250,000 in sales.
Today, under the son's leadership, it averages $4,000,000 in volume per year and makes a net profit of around $400,000 annually. But the son is fed up and tired of the situation. His Dad still owns 100% of the company and only pays his son $4,000 per month plus the use of a company pickup truck. The son works eighty hours per week, is not trusted to sign checks and can't make any decisions or major purchases without Dad's blessing. The son wants to quit, start his own company and fire his Dad. What would you advise him to do?
Over time I have received many emails from 2nd generation managers. The typical theme is that they're unhappy with how they're treated by their parents/owners and, at the same time, often not respected by other employees since they're the owner's son or daughter. A cross-section of the comments and complaints I get include:
The consensus for these sons and daughters caught in a bad situation is a common desire to do more, want more and get more than they are currently getting. They see their Dad stuck in the past, not letting go, not trusting them to make major decisions or take over anytime soon. They are tired of working lots of hours, getting jobs nobody else wants, not participating in profit sharing and not seeing immediate or long term rewards for their efforts and contributions. They are frustrated reaching for the carrot that doesn't ever seem to be available. They want more and don't know what to do. But, they also don't want to upset or confront their Dad, so they write me and hope for a magic solution to the problem.
First Off, Children Must Earn Ownership!
Before sons or daughters are given ownership, they must be able to answer these questions in an affirmative manner:
Commit or Say Good-bye!
Before sons or daughters should be considered for ownership of any company, they must earn their position of leadership and contribute to both the bottom and top line. If earned, the parents must be then willing to sit down with his son or daughter and tell them the straight truth about his ownership transition plan. Often the Dad strings his kids along by never making a decision when or if the transition will take place, how the ownership will be earned or distributed and when the Dad will step back and retire.
These unclear plans and unstated promises cause the son or daughter to get frustrated and unhappy. The Dad must take responsibility and write out his plans and review them with his son or daughter early in their careers. If this doesn't happen, they will finally confront their Dad and can cause the family to split.
My recommendation for sons or daughters who don't clearly understand their parents' transition plan is they should ask for one. If they don't get satisfactory answers, amounts and dates, start looking for new jobs. I have heard too many stories of sons waiting for their Dads to give them the company only to find out it won't happen for twenty or thirty more years.
People Don't Change!
People don't change unless they want to change. You can't change people unless they see the need to change. The Dad in these stories doesn't have any reason to change, let go or give his boys profit sharing or ownership. Sons or daughters who want more won't get it until they confront their parents, communicate exactly what they want and tell them the consequences if they don't get what they want.
For them to get their parents to change and offer ownership, more accountability and additional responsibility, typically they also must lay out a positive plan for their increased role in the company. Then they can hope their parents agree. If they won't agree or don't want to change, the younger generation must be willing and ready to quit working for the family business and get on with their lives.
Should a Son or Daughter Work for Their Parents?
A high school senior wants to work for his Dad's construction company some day. He can't decide if he should go to college or start working right out of high school. He is leaning towards starting work without college. His Dad says he could use him out on the jobsite now. Plus, he argues, a college degree is expensive and won't really matter if he works in the family business.
Here's my take: Why would a young high school son or daughter want to start working immediately for their parents after graduation? To me, immediately going to work in the family company is the easy way to go instead of doing what's best for his son or daughter. It's also not usually in the best interest of the company by any means.
By going to work for his parents, the son or daughter won't have to take any employment risks, won't have to experience the challenges of college or worry about finding a job in the future. And the children in this situation invariably think they will get to run the company some day. But do they have any assurance the company will fulfill their dreams and promises?
Are they as prepared as possible for operating the business, when all they know is framed within the company? Will the company still be around when the parents finally turn it over to them fifty years later? Will not having a college degree hurt him in the future? What if, after working in the company for awhile, the 2nd generation person decides they don't like the sweeping industry and want to change their career path?
Why Do Parents Hire Their Children Too Early?
Bottom Line: What's the Advice?My advice to sons and daughters of sweeping contracting company owners is to go to college and get a degree in what they feel is best for their future. If joining a sweeping company is their career path, get a degree in something like business management. After graduation, go to work for a major contracting company (even if it's in an allied industry), one that has an intern training program for college engineering graduates. Learn as much as you can from the professional company, their managers and systems.
Work hard and get promoted to Project Manager, Superintendent or Estimator. Practice and perfect your newly acquired skills and grow into a valuable management team player and contribute to the bottom-line in a major way.
When you become a success on your own, you're ready to apply for a leadership position at your parents' company. But only accept an offer under your terms with a written agreement about your responsibility, stock ownership and profit sharing will occur in the future. Be ready to work harder than anyone else in the company. Expect no special favors and earn your pay like a professional. Get promoted to stockholder and help the company grow to the next level as your parents back off and let go.
When a son or daughter works for their parents' company, they should always ask themselves if they could do better, make more money, have more fun or get ahead faster elsewhere. They should never postpone their future waiting for parents to potentially give them a piece of the company someday. Parent owners and sons/daughters should discuss, agree on and put the following into writing:
Sons and daughters, if your ownership parent(s) are not willing to be open and honest with you about the future of the company, ownership, transition and compensation; you have no choice but to fire them by quitting. Aren't family businesses fun?
George Hedley owns Hedley Construction and Hardhat Presentations. He is the author of the "The Business Success Blueprint Series" now available in 8-workbook and audio CD sets. He is available to speak at your organization on his proven system to build profits, people, customers and wealth.
E-mail him to receive a free copy of his book entitled "Everything Contractors Know About Making A Profit", signup for his free management e-newsletter, visit his online bookstore, or receive more information. Call 800-851-8553, visit his website at www.hardhatpresentations.com or e-mail George at firstname.lastname@example.org.
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