Losing Control Excerpts from: Becoming a Wealth Transfer Specialist Learn More

I remember Pete, a very successful family-business retailer and wholesaler. Pete's only son, Jerry, worked side by side with him until the day Pete died at the ripe old age of 83. Jerry inherited the business, but incredibly, even though he had been involved in the business most of his life, Jerry had never been allowed to make a single important business decision. He was totally unprepared to assume leadership of the business.

As with many small businesses, the biggest obstacle Jerry had faced over the years was getting his father to give up a degree of control by passing along some of the business responsibility. But Pete never did become convinced to loosen the reigns. Suddenly, at age 65, Jerry found he was in charge. Within six years, the bank owned the business. I ask you, how long will your business be able to perpetuate itself if your only active heir spends his entire business career as no more than a "go-fer" for you? The issue of losing control of the business can be incredibly difficult for some owners.

Another example clearly illustrates the problem. Alvin was a successful Colorado sheep rancher. One day as I visited with him, Alvin confided in me that he and his wife had always wanted to take a trip to New Zealand and Australia to see sheep ranching there. He wanted to go, but he felt he just couldn't leave the business. I reminded him that someday he was going to leave it anyway-on a much longer trip-the day he died or retired. I suggested he and his wife go ahead and take the trip and let their adopted son and daughter run the ranch. It would be good for them to get away, and besides, it would give him the opportunity to evaluate the children's management abilities.

Alvin wasn't too keen on letting his children run the ranch. I remember one day visiting with Alvin, his foreman, and his son. Alvin was busily giving instructions to his foreman, virtually ignoring his son who also was present. It was painfully obvious to all of us that Alvin had greater confidence in his foreman than in his own son. I can't help but think that this callous treatment was at least partly responsible for the son's lack of self-esteem and probably contributed to his abuse of alcohol.

Alvin never made the trip down-under. He did make the longer trip I warned him about, however. When Alvin died, the children were totally unprepared to manage the ranch, and before long, they were forced to sell. A very unhappy result for everyone involved. The business ended up lost, Alvin and his wife had never taken the trip they dreamed of, and for much of their lives, their relationship with their children was strained. All due to the fear of losing a little bit of control over the business.

The entrepreneur can be forgiven for wanting to hold on to the business given the blood, sweat and tears that likely went into building it. Nevertheless, for the sake of both the business and the family, at some point succession planning must be addressed. Look at it this way; business leadership will pass one day - the question is, should that day be planned for in advance or simply dealt with when it arrives? Arrive it will.