"It's very easy to do succession poorly," says Clark. "Family business owners need to realize sooner rather than later that it's their job to groom the next generation of managers."
Passing on a business involves much more than just signing a will. In fact, many family business owners will laugh at the idea of inheritance.
"We bought this business!" says Sherrie Peoples, referring to the one-time transition of ownership from her father to her and her husband. Peoples says it was easiest for the family to make the financial handoff very clear, even though her father does still own their store building. "He comes by once a month and picks up the rent check. And he keeps an office in here. We can't get rid of his office!" she laughs.
The Williams family has made its generational handoff much more gradually. "When I first came in," remembers Malcolm Williams, "my father made me pay 'x' number of dollars for shares of stock. As I was here longer, he'd give me more and he got less. As I had more responsibility, I got more stock. He made me work for it, but he was always fair. Now I'm in the same shoes with my son, trying to give and take and make everyone happy."
"The transition between the founding generation and the following can be brutal," says Rivers of The Family Business Institute. "It's a challenge to figure out how to transition stock, how to avoid state taxes, and how to treat all the children fairly."
When it works, however, the business is often a customer-friendly powerhouse, as so many thriving custom retail shops can attest.
"There's a reason why 35 percent of Fortune 500 companies are family-owned businesses," says Clark. "When it's well done, a family business has a very high return on investment, and it can nurture an incredible culture as well."