Wealth of Wisdom

CHAPTER 41How Can You Ensure the Success of Your Successors?

Dean Fowler

How can a mentor help to ensure the success of a family enterprise successor? One effective way is by encouraging successors to emulate behavior that fosters continuity of the business from one generation to the next. In consulting with numerous family businesses over the past 40 years, I have identified seven habits of highly successful successors (with apologies to Stephen R. Covey, author of The 7 Habits of Highly Effective People). Good mentors promote these best practices and guide their protégés in adopting them.

These seven habits encompass the three distinct roles of successors in family enterprises: family membership, company management, and business ownership. The first two—establishing independence and reshaping communication dynamics—nurture healthy family relationships and typically develop during the protégé's 20s.

The next three—demonstrating competency, participating in strategic decisions, and clarifying boundaries—provide the framework for management responsibilities and growth during the protégé's 30s.

Finally, by developing liquidity strategies and assuming financial risk, successors are transformed from passive shareholders into proactive participants in ownership of the business. This final stage of mastery typically occurs during the protégé's late 30s and 40s.

Many of these principles can also apply to families who don't have operating business, but who still operate together as ...