Why Many Business Owners Don’t Want Their Kids to Inherit the Company


(StatePoint) Being a business owner is considered an “American Dream” by many, yet when it comes to succession planning, a recent survey reveals that not everyone feels the same way about passing the torch onto their children.

The survey was conducted by Versta Research on behalf of Wells Fargo in January and February 2023, and studied the attitudes of 1,008 “wealth creators,” which were defined as U.S. adults aged 50 or over who have at least $1 million in investable assets and earned (not inherited) most of those assets. Thirty-nine percent of business owners say their business has been an important source of meaning and purpose in their lives, yet half (52%) don’t want their children to inherit and succeed them in running the company. And among parents, nearly all (93%) want their children to forge their own path, rather than follow in their footsteps.

“It may sound very much like the plot of a television drama, but many investors lack confidence in their children’s ability to step into their shoes. Others believe handing over the keys to the castle will be a disincentive to earning their own financial success,” says Michael Liersch, head of Advice & Planning for Wells Fargo.

But as Liersch points out, some wealth creators feel they are doing their child a favor. “Many parents are simply recognizing that their children’s strengths and interests are not aligned with the family business. Having those insights can be key to effective succession planning.”

All this is not to say that parents don’t want their children to succeed. The large majority (67%) want their children to live up to their family’s standards of wealth and success, and many go so far as to assist them financially with education, car purchases, healthcare expenses and even travel and vacations.

Nine out of 10 business owners attribute their own financial success specifically to hard work and determination. Two-thirds (67%) cite the advantages of a good education, and over one-third (37%) acknowledge the importance of living in the land of opportunity, while a quarter (23%) acknowledge the role of luck.

Helping to move this success down through family lines tends to get trickier for some, though. While 73% believe they have succeeded in passing down their financial values, 45% worry about their children not knowing how to build wealth of their own, and a third (35%) report it has been hard to transmit their work ethic to their children.

So how can one plan for the future in a way that may help protect the business while promoting family harmony? Leaning on a wealth and investment management firm that has expertise in succession planning, estate planning strategies and family dynamics can help families forge a clear path ahead.

“What’s most important is that everyone is aligned and there are no surprises,” added Liersch. “Without a thoughtful conversation and formal plan, assumptions can be made and disruption to family dynamics are highly likely.”

*****

This advertisement was written for Wells Fargo Wealth & Investment Management (WIM).

WIM is a division within Wells Fargo & Co. WIM provides financial products and services through various bank and brokerage affiliates of Wells Fargo & Co.

Wells Fargo & Co and its affiliates do not provide legal or tax advice.

Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.

Investment and Insurance Products are:

• Not Insured by the FDIC or Any Federal Government Agency

• Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or Any Bank Affiliate

• Subject to Investment Risks, Including Possible Loss of the Principal Amount Invested

©2023 Wells Fargo Wealth & Investment Management. All rights reserved.

PHOTO SOURCE: © vadimguzhva / iStock via Getty Images Plus


More Resources

Is Running a Business for You?
Not everyone is cut out to run a business. Not everyone is cut out to be an entrepreneur.
Top Ten Ways to Increase Your Profitability
1) Go back to basics.Take a couple of steps back and address the fundamental facts or principles of your business.
An Entrepreneurs Challenge
Living in the twilight zone has its advantages. In the early days of starting my business, I found the limitations of living in a rural area to be restrictive.
Creativity & Entrepreneurship: The Secret to Discovering Your Purpose in Life!©
Hello Creative Entrepreneurs!In the second course on Creativity & Entrepreneurship we begin with a guided meditation that I created entitled: Dream Keeper-Gift Giver©. You ask: what in the world does this mean? Well, it's a very profound secret I discovered about myself fifteen years ago.
Franchises - Emotional Fulfillment - The Challenge
Does A Franchise Meet Your Needs?Do you look forward to Friday afternoon or Monday morning? Perhaps that's the true litmus test of happiness. If you're thinking about the fact that there's only one day to go before the weekend, when you just got back from lunch on Wednesday, it may be time for a change.
Street Smarts Vs Book Smarts, What Does It Takes To Be An Entrepreneur
The latest series in "The Apprentice" features 2 distinct groupof candidates. One group, who are only high school graduates aretermed as "Street Smarts" by Donald Trump whereas, the othergroup are all college educated with some having MBAs and advanceddegrees.
Double Down on Marketing
If you want to compete in the world of high growth startups, you better know how to play the marketing game. Marketing has become a big stakes game where companies are betting fortunes on the success of their products.
Business Start Up Tips From Some Hearty Entrepreneurs
When's the last time someone asked you: "What's new?"If you're starting or growing a business, an e-business, or a web site, the answer is: "Everything!" - especially on the inside.Face it, launching a new enterprise - or taking it to the next level - can sometimes feel scary and overwhelming.
The Business and Life You Want to Build
In the early days of my first consulting business, I knew I needed some sort of plan to give me the greatest chance at success. I took many a wrong step, yet in the end I managed to put a solid business together.
Leadership Attributes for Business Success
Business success is essentially the result of successful leadership. Contrary to the popular myth, leaders are not just born.
The Danger Of Hate
As you have shown an interest in starting a business of your own it would be safe to assume that you want to changeyour life. You want more money - more control over yourlife - more respect.
The Six "F" Words Every Entrepreneur Should Know
Start your own business, and soon enough, you find yourself in a situation where there are many things you want to say, all of them unprintable.It happens to every entrepreneur - a moment of extreme challenge that causes you to wonder why you started the (expletive) business in the first place.
Goals and New Venture Creation
More and more corporate workers are leaving their jobs to start new ventures. When taking this leap, it is important that the goals of these entrepreneurs are solid, as these goals may ultimately determine the success of the new venture.
Solo Mojo for Solo Entrepreneurs --- Where's Your Juice?
I recently read a magazine article about Andrew, a 42-year old businessman. He gave up a demanding law practice in the Northeast, moved South to launch a new furniture and interior-design store, and wrote his first fiction novel in the midst of that transition.
How To Grow Your Micro-Business
If you want to grow your micro-business (defined as a business with fewer than five employees), you mightconsider some of the findings of a survey by Statistics Canada.1.
Three Cs - What Startups Need to Get a Business Loan, Part 1
You want to get a good, solid overview of what it takes to acquire that business loan you need, especially if you are a startup. The essential element of what the lenders out there require of you can be wrapped up in the acronym, C.
Dream It, Create It, Become It! Design a Dream Board
Have you ever heard of "Dream Boards" or "Treasure Maps"? A Dream Board is a visual picture of the dreams you have for your life. Some of my clients also use this concept to visualize their businesses! It's their first business plan.
The Term Sheet's Role in Raising Venture Capital
Entrepreneurs and companies who are seeking venture capital often negotiate with one or more venture capital firms on a number of important issues. These issues include the amount of capital to be raised, the investment terms, etc.
The Cockroach Test
Let me ask you a question? Imagine I would offer you $10 for eating 10 living cockroaches. Would you do it? Now listen, I raise the ante and offer you $100.
5 TIPS for Home-Based Business Entrepreneurs
Have you ever heard that only a small part (5%) of 'all' Home-Based Business entrepreneurs achieve success?Do an online research on your favorite Search Engineand you will understand what I mean.In this article I'm going to show you the KEY to Home-Based Business entrepreneurs success; you'll find out what makes an entrepreneur succesful in the home-based business field.

More Entrepreneurialism Information:

Related Articles

How Good Is Your Big Idea
Q: I want to start my own business. I have tons of business ideas that all sound great to me, but my husband is not so sure.
Create Your Entrepreneur Dream Team
I hear it all the time. "What should I do about .
Identifying the Right Venture Capital Firm Partner
Venture capital firms are comprised of individual partners. These partners make investment decisions and typically take a seat on each portfolio company's Board.
Business Development: The Basic Ingredients
Cooking isn't much different than building a business. You have the basic ingredients all laid out on the counter and if you put them together in the right way - you have a nice meal to nourish your heart, body, and soul - and the pocket too.
Creativity & Entrepreneurship: The Secret to Discovering Your Purpose in Life!©
Hello Creative Entrepreneurs!In the second course on Creativity & Entrepreneurship we begin with a guided meditation that I created entitled: Dream Keeper-Gift Giver©. You ask: what in the world does this mean? Well, it's a very profound secret I discovered about myself fifteen years ago.
Reducing the Stress of Being an Entrepreneur
Starting and running your own business can be exciting and rewarding, but it can also be very stressful. For most of our almost 40 year marriage my husband has been an entrepreneur and I have sometimes worked with him.
Something From Nothing, With Something To Share
Betrayal, it can hit you like a load of bricks falling from the sky, leaving you with a pit in your stomach that no pill can cure.Starting your own business is hard enough, however when your inside people are working against you as well, it can make the toughest of souls weak at the knees.
The Perfect Little Coffee Shop: Are You Afraid of Failure? Are You Letting that Failure Cripple You
Ah, coffee, the drink of choice when I want to share a special moment with friends, when I want to sit and ponder life or when I want a moment alone. I am an avid coffee drinker.
Be an Entrepreneur
The Department of Labor predicts that the #1 employer in 2010 will be "self." A recent Internet poll of 25-44 year olds revealed that 90% of them hoped to own their own business.
The Deal is in the Details
What Startups Need to Get a Business Loan, Part 2In part 1 of this article, entitled "Three C's", we looked at the overview of startup business loan requirements from the lender's perspective. We read how cash, good credit and sufficient collateral form a joint partnership to enable a loan request to bond together into a doable deal.
What Makes a Person an Entrepreneur?
Entrepreneurship is generally characterized by some type of innovation, a significant investment, and a strategy that values expansion. The entrepreneur is often quite different in mindset from a manager, who is generally charged with using existing resources to make an existing business run well.
Evaluating an Opportunity
Business opportunities are often based on broad trends, such as:? demographic, such as the "graying" of America (creating opportunities in health services, for example);? sociological developments, like the "green" movement, with its emphasis on recycling and environmental sensitivity, and;? cultural changes caused by changing economic conditions and technological developments.Opportunities can also frequently be found in current and developing business trends such as:? the globalization of business,? the need for outsourcing created by downsizing, and? the burgeoning service economy.
Methods of Generating New Ideas for Entrepreneurs
Summary: Even with a wide variety of sources available, coming up with an idea as the basis for a new venture can still be a difficult problem. The entrepreneur can use several methods to help generate and test new ideas including focus groups, brainstorming and problem inventory analysis.
Franchise Business and Franchise Businesses
Franchise business is being part of a successfully proven business that has a name or trademark that is well known and profitable. Franchise businesses are strategically tried and marketable with options to expand by offering products and services that appeal to the consumer.
The Power Of Personal Environments
I've got to admit, I'm a big fan of comfort. I like it when things in my world are stable and reliable.
Making the Financial Transition
Making the financial transition from paid employment to earning a living on your own is probably the single biggest challenge facing many would be entrepreneurs. For most, the mere thought of financial insecurity holds them back from even trying.
Increase Profits with No Pain, No Change Approach
Implementing changes, even when they're good for your business, can be tough. As the old adage goes, old habits die hard and it's just as true in business as it is in our personal lives.
Do You Have What it Takes to be a Successful Entrepreneur?
Print off this page, take the quiz and find out if you've got what it takes! See the scale at the bottom to mark yourself.Answer the following questions on a Scale of 1 - 51 - definately not 2 - not likely 3 - sometimes 4 - probably 5 - definitely--------------------------------------------------------------------------------1) Do you have many hobbies (besides TV viewing and playing video games)? ____2) Do you take a leadership role in group settings? _____3) Can you discipline yourself to finish a project, even if it means late nights and low recognition from your peers? ____4) Do you often think of new and innovative ways to do things? _____5) Do you enjoy meeting new people? ____6) Have you had success in the past in planning a project, and carrying it through to it's completion? _____7) Would you consider yourself a positive person? ____8) Even when things go wrong do you try to "learn a lesson" from the experience? ____9) Do you enjoy working alone? ____10) Do you manage your time well? ____11) Do you like to set goals and achieve them? ____12) Do you like to take calculated risks to achieve an objective? ____--------------------------------------------------------------------------------ScoringIf most of your scores are 5's you have a very strong "entrepreneurial streak" and should strive for your goals.
Preparing to Outsource
It's important to understand when to add individuals to your business model. Adding a new team member should be an easy transition - that's where organization comes in.
What Online Millionaires Tell Me They Are Worried About
I just arrived back from the best seminar I have ever attended in the last 10-years.There were more "Underground" millionaires at Yanik Silver's"Underground" seminar than I've ever had access to at one time ever!Upon arrival, we had to sign Non Disclosure Agreements, andfor very good reason.