Peasant to Merchant to Peasant in Three Generations

About three thousand years ago a group of Chinese business owners were sitting around after their local businessman's group meeting. Their guest speaker that day was a very ancient and widely respected management consultant. It had been raining for days and the roads were a mess, so the ox cart that was picking him up to take him to the next village was running late.

That gave the business owners a chance to pick his brains further. They were all complaining to him about how their offspring just did not want to work hard like they had. They told the famous management consultant that their sons also wanted them to delegate decisions to them - even though they only had a few years experience.

And their sons were anxious, especially the married ones - they kept asking him when he was going to retire and turn things over to them. What is the problem with this younger generation they asked?

The seasoned successful business owners sitting at the feet of the management consultant that day were frustrated. After all they had worked for their honorable father for thirty years and they were happy to be told what to do by him and his most honorable father - both of whom were still around the business in case he had any questions. His father had not ever talked about retirement, although recently, now that he is over seventy - he does not come to work until 7am and leaves before 8pm.

If working long hours for decades, being told what to do and how to do it was fine for me, why do my sons seem so ungrateful?

The ancient Chinese management consultant listened carefully to each business owners' concerns and then said, "peasant to merchant to peasant in three generations." Just as the business owners were about to respectfully ask for clarification, his ox cart pulled up out front and like legions of consultants to follow him over the centuries - he got up and left without explaining what he meant.

They knew what he meant. They had seen it happen to their neighbors. A peasant worked hard growing more than his family needed to live on and sold the remainder. With the profits he bought more land and grew even more - making greater profits until one day he had a thriving business that did not require him to grow anything. Now he was a merchant and it was that business he passed along to his eldest son.

That son was successful doing what his dad had taught him. The business grew and grew until it seemed like it could run itself. When his son came along there was no need to impress upon him just how much sacrifice had been required by his grandfather to build the business in the first place.

He did not want to talk about the day when he had to carry the goods on his back to the next village to sell because his only ox had died along the road - slipped in the knee deep mud and broke its leg. He saw no value in telling his son the price he had had to pay in the early years to build what his dad had created into what it is today. He had actually never told anybody, his ever faithful and long suffering wife did not even know how hard it had been.

So when his son comes along he gets his own ox and two carts - one for the nice days and one when the winter winds come. The son gets his own little house not like the room in back of his grandfather's house that his dad and mom shared with him and his two siblings.

The son had never experienced a drought, never saw a band of marauders burning their fields, and had never known what it was like when the price people were willing to pay did not cover the cost of growing the crops - so they lost money on everything they sold.

When the ancient Chinese management consultant left - what the business owners were still confronted with was WHY had the business failed in the long run turning the third generation merchant and his offspring back into peasants? And is there a lesson for us today, three thousand years later.

Successful companies - defined by me as those who systematically empower the next generation of owners from their first day on the job - all share a single characteristic. These companies have managed somehow to instill a sense of shared purpose about the future of the company. Every decision whether personal or business flows from that spirit. When everyone is totally committed to a shared vision of the future - they make decisions most likely to move them all toward that picture.

A successful business exists and is successful to the extent that it is a vehicle to accomplish the family's goals and objectives. And business succession is not planning it is a process.

When working from a perspective of shared goals the necessary training is encouraged, expected really and gladly undertaken. If the mission is to build management for the future and that takes training then training it is. When everyone is on the same page about the future they call in the advisors, sooner rather than later, because the need for their expertise is understood. When everyone is on board and rowing together in the same direction, Dad goes shopping for a new Bass boat and mom starts planning for their European vacations.

Siblings with no commitment or interest in the business find other paths while mom and dad provide the resources to help them in lieu of a share in the business they do not want. And they start today - knowing that the kids committed to the business already have, in a way, their inheritance. It doesn't seem right to make the others wait until the worst thing they can imagine happening happens before they get any of theirs.

And those who will run the business in the next generation will begin to look for the best ways to use their talents and those of the existing key managers and employees so the process of succession is smooth, seamless in fact.

When mom and dad sit down with their advisors they do so with the picture - what the whole family wants the company and everything else to look like in the future - right there on the table in front of them.

It's the advisors role to create the documents, the cash required in the form of life insurance, and the structure - so that their wishes will come true.

So, it does not have to be "peasant, to merchant, to peasant" in your family's case. But that is what is most likely to happen unless you do something about it.

If the business fails to achieve it's potential it's your fault. It's not taxes, it's not the economy, it's your fault just like it was their fault (those ancient Chinese business owners) for not stopping the cart and dragging that consultant back into the room and asking him what they could do to avoid the predictable cycle.

What should you do? I suggest you start with a family meeting.

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