‘How do I determine if my kids will take on the family business?'
With our client groups, especially with multi-generational members, the question that has often come up over the years working with them is – how do I determine if my kids will take on the family business ?
The biggest mistake family businesses make is assuming succession will happen naturally rather than treating it as a structured decision process.
I’ve recently completed the sale of a very large WA family business that we have been advisors to for 34 years. The family have gone public, and we have permission to share some basics, but I’ll leave that for another story. The key outcome, other than a successful sale, was that it was determined that the two daughters were not going to take on the national and international family business. The result of the process was that it had become too large for them, and they had their own lives to live. Whilst among our family business members, it's great to see successful succession, the pressure that can be exerted and also the expectation that comes with the decision to take on the family business can be enormous.
Here’s my practical, advisory-style framework we built that you can use with your family business …
1. Start with Intent — Not Assumption
Encourage the owner to separate:
- “Do I want my children to take over?”
vs - “Do they actually want to?”
Key step:
- Have individual (not group) conversations with each child
- Remove pressure—make it clear this is optional, not expected.
Why it matters:
Unspoken expectations often lead to disengaged successors or family conflict later.
2. Assess Capability and Fit
This can and should be treated like any senior hiring decision.
Evaluate:
- Skills and qualifications
- Work ethic and professionalism
- Leadership potential
- Alignment with business values
Best practice:
- Require external work experience (3–5 years minimum)
- Avoid bringing children straight into senior roles.
Reality check:
Not every child is suited to run the business—and that’s okay.
3. Create Exposure Before Commitment
Instead of a yes/no decision, introduce a trial pathway:
- Internships or part-time roles
- Rotations across departments
- Defined KPIs and performance reviews
Goal:
Let both sides test:
- Do they enjoy it?
- Are they good at it?
- Do existing staff respect them?
4. Introduce Governance Early
A different approach, and one to professionalise more what you do, is shift from “family business” to “business with family involvement.”
Put in place:
- Advisory board or independent directors
- Clear reporting structures
- Formal job descriptions (yes, even and especially for family members)
Why this matters:
It reduces bias and makes succession decisions more objective.
5. Separate Ownership from Management
A key concept many families miss.
Children can:
- Own shares without working in the business
- Work in the business without controlling it.
Discuss options:
- Equal vs unequal ownership
- Voting vs non-voting shares
- Dividend expectations
6. Develop a Structured Succession Plan
If there IS interest and capability:
Create a roadmap:
- Timeline (e.g. 5–10 years)
- Milestones (roles, responsibilities, leadership progression)
- Training and mentoring requirements
Include:
- Gradual transfer of decision-making
- Clear triggers for increased responsibility
7. Address Family Dynamics Explicitly
This is often the hardest part.
Facilitate discussions around:
- Fairness vs equality
- Roles of non-participating children
- Spouses/partners involvement
- Conflict resolution mechanisms
Tip:
Use an external facilitator or advisor—this is rarely done well internally.
8. Plan for the “No” Outcome
This is just as important as planning for succession.
If children are not interested or suitable, consider:
- Professional management (CEO model)
- Sale of the business
- Partial sale / private equity
- Wind-down strategy
Reframe:
A successful outcome is not “kids take over”—it’s “business continuity and family harmony.”
9. Document Everything
Formalise decisions through:
- Shareholder agreements
- Family constitution
- Buy-sell agreements
- Estate planning alignment
10. Review Regularly
This is not a one-time decision.
Reassess every 1–2 years:
- Interests change
- Capability evolves
- Business needs a shift.
Simple Summary
You could summarise it for your client as:
- Ask – Do the kids want it?
- Assess – Are they capable?
- Test – Trial involvement
- Structure – Governance + roles
- Decide – Succession vs alternatives.
- Document – Legal and ownership framework
Final Thought
The most valuable advice you can give:
Treat succession as a business decision informed by family, not a family decision imposed on the business.
Of course, the above is only a process. But following it can save a lot of heartache.
By Western Australian based Family Business Accredited Advisor
Stewart Blizard
Principle at Insight Advisroy Group
