(February 2008) The current demographics leave little doubt that the Canadian economy is about to undergo a radical shift of wealth as boomers retire and a new generation takes over. All too often, however, the family business will find itself in a position of playing catch up.

Article highlights:

  • The family unit always adds complexity to business planning and retirement planning for business owners.
  • Questions you can ask.
  • Can your clients imagine the kids in charge?
  • Working with the family’s team of professionals.
  • Resources and other support.
Article continues below

There are a couple of places business owners go to, initially, when thinking about transferring assets and business operations to their successors. They believe either that it’s too late or that they have plenty of time to think about it, even though it is clear to anyone working with this issue that it is never too early or late to take some action.

Your client’s business isn’t the same as the one I grew up in, but I have learned that the family unit always adds a dimension of complexity. Business decisions and planning decisions that don’t allow for the delicate need to balance family relationships could have long-lasting and devastating results. I have seen too many families at war when the written succession plan is actually the last will and testament of the current owner.

As parents, your clients will be torn between business and the “fair” approach — the challenge of balancing a pure business head and their family-oriented hearts. I would never try to answer that question — there are too many variables at play in the whole scenario — but there are some questions you can pose to help them decide on some of the issues:

1) When does a leadership change happen in your business plan?
2) Who will be taking over, or will you sell the business?
3) Have you groomed the person you expect to take over?
4) Are all the parties aware of their roles, the timelines and expected outcomes?
5) Are the documents in place to support your plan?

While this is just a simple set of starter questions, it provides a great beginning to the business transition journey.

There are a multitude of issues beyond the pure business your clients will need help considering. My favourite example involves the family cottage. Let’s assume the family has three children, two who are active in the business, but only one who has shares in the company. The question of who runs the firm is clear, probably decided based on the skills and aspirations of the two active children. The ownership pot is probably divided into three, assuming no employees have ownership. But what about the other family assets? Does the cottage end up split three ways? What about the fact that the oldest child has your client’s only grandchildren?

This added layer of heartfelt issues is always why the three-circle model above is such a valuable tool. First, identify who is involved in each circle (the current owner probably sits at the intersection of all three) and help your client work out how he or she will deal with each person. The reality is that a leadership change, sale of the business or complete exit of the current owner will affect everyone within the model.

Related articles:
 • Leadership change
 • Tax planning for business
 • Build your book
 • Links and resources
Back to
Advice for business owners
Encourage your client to discuss his or her plans, and the family’s aspirations, as early as possible, maybe in a family meeting formally called for the purpose. The best plan will be worthless if chosen successors are actually wondering how to tell their parents they would rather leave the family business to become a journalist.

Equally, the transition of leadership may mean a transition of vision. The current business owner sees the future in a certain way based on his or her experience. The new generation may have a very different view or set of goals, but because ownership normally shifts more slowly than leadership, they may feel handcuffed by their parent’s view of the company.

Next: Can your clients imagine the kids in charge?


The child as CEO, meanwhile, can also overhear the parent questioning his or her judgment to long-term employees in the business. This is no scenario; it happens all too often. Yet at the same time, the last leader will wonder why the new generation is risk averse.

To the current leaders, there is a real challenge here. The question to pose is simple but difficult to truly answer:

Can you let go?

Can your client give advice about the family business when asked? Ask questions instead of offering advice? Be prepared to support the new leader even if there might be high-risk decisions or mistakes to live with?

These are tough questions, but no business leader worthy of the name hasn’t made some mistakes or taken some hard knocks, and grown as a result. The current generation cannot take away the ability of the new one to get it wrong and learn as a result.

The move from leader to mentor isn’t easy either. When your clients have called the shots, being asked which way to shoot requires a very different mindset. Encourage them to be honest about it with their successors. They might also decide to change roles over a period of five to 10 years, allowing authority to shift gradually, giving the children the opportunity to develop their own skills and leadership style.

Also, decide who is available to help work through the issues. Most already have accountants, bankers and lawyers who can play a role. Some may need a professional to facilitate family meetings, especially in the early days — an outside, cooler head is a great way to control the emotional temperature.

Some universities also have family business centres with excellent courses to help this process. The premier course for families is called “Roadmap.” It is attended by the entire family to build the plans required. Families who have taken this course literally use words like “life changing.”

The Canadian Association of Family Enterprise has been around for 25 years, serving families through peer support, awareness and provision of tools. The great part is that CAFE’s families use their experience to help others. Its chapters across Canada run small groups of family-business people where participants can share and grow together. This support is not a one-off solution — many families take years to work through all their concerns, especially as the younger generation changes their aspirations and matures.

Related articles:
 • Leadership change
 • Tax planning for business
 • Build your book
 • Links and resources
Back to
Advice for business owners
Even if their retirement is 15 or 20 years away, your clients need to start thinking now. What education will help the son take over his father’s role? Where should the daughter work to gain outside experience and become a well-rounded leader? How will siblings pass the firm to a more diverse set of cousins (their children)?

Succession guides are available from the Canadian Federation of Independent Business to help draft an outline plan and address this larger process.

The challenges of a succession are real ones. The statistics don’t lie. It is difficult to pass a business across generations. At the same time, many of the most successful businesses in Canada have achieved it and thrived over many generations.

Encourage clients to talk to their families and begin the process of building the future. It is vital to every sector and the economic health of this country. Don’t let it become a horror story of the future by not paying attention to it.

Good luck!

Lawrence Barns is CEO of the Canadian Association of Family Enterprise, a national, member-driven association, passionately committed to assisting families in business. For more information, visit

What do you think? Let us know by sending your letters to


Originally published on