A car dealer, age 80, getting ready to retire, was shocked when his son, whom he considered his successor, announced he was planning to retire soon.

AN UNUSUALLY HIGH NUMBER OF FAMILIES OWN and operate retail new-vehicle dealerships. This being the case, there are many important succession and management issues that must be addressed to accomplish the goals desired jointly by the family.

Important questions must be answered by the business owner before an effective and successful generational change can get off the ground.

  1. Do I want my family to have ownership and operational control after I retire? Or do I plan to sell out and distribute cash bequests to my heirs?

  2. Do I have a capable, committed potential successor who stands willing to make the necessary effort to learn and operate the business to the benefit of other family members who may own minority shares of stock?

  3. Can I assume the responsibility of teaching my potential successor? Do I have the patience to teach?

  4. The car business is a tough and competitive business with minimal financial support from manufacturers. Can my progeny “cut the mustard?”

There are several personal questions that need to be addressed. Some of my contemporaries have shared their reluctance with “saddling one of my kids with responsibility for perpetuating of the family equities in the business after I'm gone.”

Like any other successful business, operational successions need a plan. When there are close family ties involved in a business relationship, complications can arise. They can cripple any transfer of management and ownership. There are many decisions and actions to be anticipated and planned so surprises are reduced when the actual succession takes place.

A car dealer, age 80, getting ready to retire, was shocked when his son, whom he considered his successor, announced he was planning to retire soon. This dealer waited too long to let go of the reins. This is one of the most common pitfalls of family business successorship: the inability or reluctance of dynamic older family business owners to transfer authority along with responsibility during the potential successor's best years.

Successful management transitions do not just happen. There has to be a plan as well as the natural instinct of a parent wanting members of his or her family to succeed and preserve control of the business.

It's important that the successor wants the business and is not just placating the parent. Our industry has its share of apathetic business heirs who would never have chosen automotive retailing except that they felt an obligation to the family to play the role of heir-apparent. Many times they will destroy a healthy business because they are unhappy and never quite feel secure in the shadow of their predecessor who, in turn, never took the time to understand the career desires of the children.

In many cases, in-laws make better successor-candidates than blood relatives because they are spared the years of parental impact by the dealer on his or her children. When transferred to a business successor relationship, that can be restricting and frustrating to any natural child of a dynamic and successful new-car dealer.

In-laws may have other burdens to bear in the business but they may find the treatment by the dealer will be more professionally towards them opposed to natural children, who may be perceived as still “kids.”

It is a difficult transition for a parent to make, going from protector-provider to business partner. It is important that you stay as far away from your successor-candidate so your position will have the least effect on the development of their relationships with other employees. It will be tough enough. Some employees may privately refer to them as spies for you, while others will simply resent them for being members of your family.

Long-term management employees may be jealous of their getting supervisory positions because they're family. However, these managers need to acknowledge that one day these persons will own and operate the business, and it would best serve them to build positive relationships for the future well-being of all concerned.

New-car dealers are indeed fortunate to have a top facility available to them for training their successor-candidates. This is the NADA Dealer Candidate Academy in Virginia. It's a year-long program in a co-op form whereby the candidate spends the major part of the program learning from the dealership department heads supervised and directed by the academy staff. They have graduated more than 1,500 quality dealers and managers since their inception in 1980.

Nat Shulman was owner of Best Chevrolet in Hingham, MA for many years.