When Kin Can Clash

“I love coming to work every day!” exclaimed the 81-year-old dealer. Energetic and mentally sharp, his idea of “retirement” was to come in to work at 10 a.m. “But I stay at least until 5 p.m.”

As the founder of his dealership empire, he was proud of what he had accomplished and still felt he could contribute and run the business. So what's the problem?

The problem is that many dealers who are in this active situation want sons (or daughters) to take over the business eventually and continue the legacy. But for that to happen, there must be a succession plan.

In working with auto dealers for the past 25 years, I have seen successful transitions between generations. Too often, I have witnessed disasters, both for the dealership and the family. Here are two key questions:

The decisions you make as to your involvement will affect the successful transition of your business. So, what needs to happen in order for your legacy to continue successfully?

First, as the patriarch, you must realize that you cast a very big shadow. It is often difficult to be your son or daughter. Undoubtedly, you are a very strong personality and you have been extremely successful, thus making it very difficult for your child to measure up to your accomplishments.

Depending on your personality and management style, you may need to change things in order to give your children the opportunity to make the decisions that are necessary for preparing them to run the dealership.

If you are a very dominating personality or have a strong need to control, you need to convince yourself to back off and give your kid some space or your succession dream will become a nightmare.

It is likely that you are comparing your child to you, and look out if he wants to do things differently. My experience is that most dealer fathers acknowledge that their children will need to do things differently. But it is a different ball game when that actually happens.

So, what should be the basis for deciding whether doing things differently from dad is acceptable? If the business continues to maintain levels of profitability (along with acceptable CSI scores, market share, following legalities and manufacturer guidelines), then it is probable that your son or daughter has what it takes, despite differences in management styles.

It is one thing to try to train your children to be successful when they are in their 20s or even 30s. It is quite a different thing to still be expecting significant change to happen in their 40s or 50s.

Badgering them to change at this point only damages your relationship, and change is not likely to happen anyway.

I told one dealer who is in his 70s and clashing with his son at the dealership: “Your son is 46, the die is cast; he is obviously his own man and wants to do things differently from the way you do things.” This son was an accomplished general manager and he definitely did things differently.

In contrast, I just met with a dealer in his 70s who is addressing the same issue in a very satisfying and effective manner.

He recognizes that his son is not the gregarious salesman and motivational leader that he is. The son is solid financially, good on administrative details, presents himself well with the public and manufacturers and has a good business sense.

Therefore, father and son decided that the best approach was to hire a general manager who could manage day-to-day operations and keep the troops fired up and selling. The father continues to be involved, but he avoids the spotlight and defers decision making to his son and the general manager.

Due in large part to the father's sensitivity to his own dominant personality and his willingness to back off, his son welcomes his dad's involvement and expert advice.

However, if you know you aren't likely to back off, then probably you need to remove yourself for significant periods of time, as did another dealer with whom I have worked.

He knew that he'd clash with his son, who is talented and opinionated, much like his father. For the dad's succession goals to succeed, he knew he needed to give the reins to his son. So the father spends at least six months a year in Florida.

This definitely helps in their situation, but there is a pitfall to avoid, if you go this route. Too often, parents exercise “seagull management.” They fly in, make a mess and fly out. You can't show up periodically and overturn major decisions. This is a recipe for business and family disaster.

Expectations are important. They must be clearly stated and defined between parents and children working together in the family business. With the help of a trained succession advisor, you need to define and get on paper what each of you expects of the other in terms of decision-making authority, time spent on the job, who is to be responsible for what, profitability benchmarks, etc.

This will enhance positive and effective co-existence, for the betterment of the business and the family.

Hopefully, you can echo the words of one dealer: “Having my father involved with me in the dealership is wonderful!”

Hugh Roberts, CFP, can be reached at 818-610-3480 or at [email protected].