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How to pass on your family business

September 10, 2007 11:14 IST

Six Feet Under might have made a killing for HBO, but that doesn't mean young people are dying to get into the funeral business.

Just ask John Bachman, funeral director at the Bachman Funeral Home in Strasburg, Pa. Bachman, 50, represents the eighth generation of his family's business, but that impressive string may finally be coming to an end: His three kids would rather do anything--from road construction to waiting tables--than join Dad in the death biz.

"The hours are terrible, the pay is not really that good and the things that you have to do are pretty disgusting sometimes," says Bachman of his work. Still, he hopes Jacob, the youngest at age 21, will have a change of heart and come aboard.

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Bachman isn't alone in his struggle. Myriad forces conspire to derail family businesses--not least of which are disinterested heirs. And the problem could get worse: While more than 60% of current U.S. family-business owners are over 55 years old and many are looking to retire, less than 30% have succession plans in place, according to a recent survey of 800 family businesses by Laird Norton Tyee, a wealth management firm.

Little surprise, then, that by some estimates, nearly one-third of family businesses don't survive the transition from the first to the second generation (let alone the eighth).

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Sadly, there are no tried and true methods for enticing the next generation to take the reins. But you can increase the odds.

First, get the kids involved at a young age. Better yet, let them experience many facets of the company: Seeing how an operation knits together is more rewarding than being squirreled away in one area.

Penny Glazier of the Glazier Group, a family restaurant empire including Strip House Las Vegas, which opened earlier this month, got son Matthew involved at age 14. "We got him started in the business as soon as he could fill out the working papers," giggles Glazier.

Matthew's roles included bartending, waiting tables and, eventually, managing an entire restaurant. He worked summers and during other school breaks. Now 33, Matthew recently graduated to company president. Says Penny: "The fact that we had exposed [him] to various jobs brought him a love of the business."

Another trick, courtesy of Lisa Laird Dunn, ninth generation member of Laird & Co., distiller of Applejack brandy:

Make the business relevant. For instance, Dunn regales sons Gerard, 11, and Laird, 9, with stories about ancestor Robert Laird, who served under George Washington--a big Applejack fan--in the Revolutionary War. "Now they are learning about George Washington in school, so I will talk about his ties to the company," she says.

Laird also brings her kids to the distillery and teaches them about what goes into making the family product. "It's difficult because I want them to join the business some day, but I don't want to push," she says. "They are still so young."

When in doubt, a little guilt will go a long way. That's what Dick Yuengling, Jr., president of fifth-generation brewer D.G. Yuengling & Son, learned back in the in early 1990s. "We were growing at 30% to 40% a year," he recalls. "We [had] a small plant here and it was only built to put out about 250,000 barrels. We were running out of beer. I had a decision to make."

While Yuengling's four daughters worked odd jobs at the company throughout high school, none had expressed any deep interest in playing a bigger long-term role--not exactly the sort of gumption Dad was hoping for. "I could [have invested] money in this and built a new storage facility, but I wasn't going to do that if they weren't interested," he says. "So I said to the kids: 'Ten years down the road, we are going to outgrow this and I don't know what to do with it once I'm done.' "

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Jennifer, the oldest, took the bait and is now plant coordinator. Though the other three balked initially, Sheryl now handles distribution while Wendy heads up sales and marketing. Says Dad: "I hope they want to take over [some day], but it would be a much bigger company than I bought [from my father] in 1985."

Of all the problems that plague family businesses, that's a nice one to have.

Lisa LaMotta, Forbes.com