Just because your family owns a business does not mean you are qualified to run it, or even take on a significant role. That's something both parents and children forget.

Your family's success does not magically transfer abilities to you. Being around a business your whole life may help, but it's not the same as proper training. If you own a business and want to bring in the next generation, there's a clear right way to do it.

Bringing in a new generation to a family business becomes exponentially harder the bigger the company gets. If you're a sole proprietor, then you only risk hurting yourself and your company. Once you add in other employees, the task becomes trickier to navigate, but it's possible if you follow these steps.

An overhead view of five people sitting around a table that's covered in papers, two laptops, and coffee cups.

Make the younger generation of your family earn a place in the family business. Image source: Getty Images.

1. Build a foundation

Before any member of the younger generation joins your business, he or she needs to gain a base level of skills. Depending on the nature of your company, that could mean college or trade school. It could also mean gaining some experience working at another business in the same space.

2. Talk with your staff

Just because someone is related to you does not mean he or she should supplant longtime loyal staff. If you plan to bring a new generation into the business, talk about it with your current staff. Share your plan and make it clear if you eventually expect to hand over or sell the company to a member or members of the younger generation.

It's possible that you could lose key staff if they see no path to ownership or to the CEO's desk. That's unfortunate, but it's better for everyone to know the plan and what's going to happen.

3. Make the new generation earn it

Unless the member of the next generation joining your company has already established himself or herself elsewhere in the field, don't bring him or her on in a key management position. Make the next generation earn whatever they get.

That may not mean starting at the bottom, but he or she should learn the business from the ground up. There should be no task beyond anyone at a small business -- from the owner on down -- and that's an important thing for the next generation to understand.

4. Mandate work ethic

It's not always easy for a child or close relative of the owner to earn respect. It's natural for employees not blessed by being born to the right people to resent someone they perceive as being handed opportunity.

Because of that, next-generation family members need to prove themselves. That means being in early and leaving late. It requires taking on unpleasant tasks and showing the rest of the company as well as the industry that the family member deserves whatever he or she gets.

Make it obvious

You want to create a situation where your employees, customers, and the industry accept the next generation of your family as worthy successors to the business you have built. When the time comes for a transition in leadership, ideally, you want it to be obvious that the next generation of your family deserves to be in charge. That's something that takes time and hard work, but it's possible if everyone involved commits to doing the work that's required.

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