Debbie Muirhead (top right) and her husband Don (bottom left) sold their Inter-Mtn. Enterprises to their daughter Leah and her husband Scot MacDonald.

Image Credit: Submitted/Inter-Mtn. Enterprises

Debbie Muirhead is typical in many ways of the thousands of families that own businesses in Canada.

The Kelowna-based entrepreneur has sold one of her businesses to her daughter but isn’t sure whether a similar transition will work for her other business potentially going to her son. He's younger and is involved much earlier in a long process.

“Whether Ross will or will not be part of our transition, I don’t have the answer to that,” Muirhead told iNFOnews.ca. “There are questions on it, but I have trust that, if it’s what he wants to do, he will be capable of doing it. I’m just not sure that we’re far enough in the process yet that we have all the info.”

The Canada-wide Family Enterprise Foundation, in a recent survey, found that 51% of family owned businesses feel the next generation is not ready to take over the business and 39% said the next generation doesn’t want to take over.

That has huge impacts for the Canadian economy as 60% of family owned businesses are expected to change hands over the next 10 years and they make up about half the country’s private sector economy.

While that includes big corporations like the currently feuding Rogers family, it also includes a huge variety of community-based businesses.

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“They’re the backbone of the economy,” Bill Brushett, president and CEO of the foundation, told iNFOnews.ca. “If you think about everything from the family farm, to construction, a lot of small and medium-sized businesses in particular and many large businesses are family owned. Of the small and medium sized businesses in Canada, roughly 90% of those are family owned so it’s no surprise that about 50% of the economy, private sector, is really family owned businesses and provide seven million jobs in Canada.”

That’s why transition to the next generation is so important. If they’re not passed on, that could mean they will be bought up by huge corporations, cutting into the diversity of the business world.

Muirhead, and her husband Don, founded Inter-Mtn. Testing, which does non-destructive stress tests on things like ski lifts, and Inter-Mtn. Enterprises that produces signs for ski hills and outdoor recreation businesses all over North America.

“Never, as a business owner, did I start these companies, nor did my husband, thinking our children would have any interest in them,” Muirhead said. “It was very much a surprise to us that they did have an interest in them.”

When the businesses and the children were young, the businesses were very much a part of the family dynamic. They were based in the home, staff lived there and the kids were surrounded by it.

Then the Muirheads did something that is suggested by the Family Enterprise Foundation but, Muirhead suspects, is not done all that much. They held some family meetings.

Those started when Debbie was diagnosed with cancer so the first one was meant to ensure that employees got paid and the business would continue. They included daughter Leah’s husband, Scott MacDonald, because Debbie believes in transparency and ensuring everyone gets the same information at the same time from the same source.

Leah went off to school and a career in finance but was recruited to fill in for three weeks when her parents took a vacation.

“We bribed her to come home to look after the dog, the teenaged brother and the companies,” Muirhead said. “After three weeks, when we got back, she said to her dad: ‘Wow, this is way more fun than finance.’ Her dad said: ‘I’ll get you a ski pass and outfitted in skis. When can you start?’ She started working for us and she worked hard. She’s been a big part of the company.”

Still, transition was not certain or fast. Leah worked at Inter-Mtn. Enterprises for 15 years and they started talking about the transition eight years ago.

“It was a timing thing,” Muirhead said. “When we first started she was keen and wanted to take over right away, but I wasn’t ready. Then I was ready and she had a baby and I’m thinking, no. You can’t do this. Then she had another baby. Then she had a car accident. Then her husband’s mother died. And then, finally, the kids are all in school and she’s ready. She’s 100% ready as is her husband. The timing is perfect.”

Leah and Scott MacDonald bought Inter-Mtn. Enterprises and the Muirheads retired from that business last month.

But, it wasn’t always easy which is why Muirhead took another vital step, seven years ago, and hired a business coach.

“It was one of the very best things we did,” she said. “He has been instrumental. At one point, there became a lot of animosity between us (her and Leah), which was not working well because the expectations were different and the communication wasn’t good. It’s very hard when you’re the mother and the owner. Those lines get very very blurred. When you have a business coach that comes in and says: ‘Little girl this is not your mother,’ it makes a big difference.”

That advice works both ways, as the coach also said: “This is not your daughter. You have to trust her and allow her to grow and do it.”

The key for a parent is to let go, Muirhead noted.

“She’s not going to do it the same way as I am but, guess what? I bet you she’ll build a bigger company with him (Scott) at her side,” Muirhead said. “And we’ve got the safety nets in place and I’m confident. I’m excited to watch it.”

That’s different with her son Ross and Inter-Mtn. Testing.

He’s trained in the field of non-destructive testing, took a business course this year but he’s seven years younger than Leah so discussions are still in the preliminary stages.

Again, it’s a matter of timing and it’s, as yet, unclear just what that transition will turn out to be.

“It’s a process,” Muirhead said. “These things take time and, I think, one of the problems that happens is that people don’t give it the time it takes to unfold naturally so that everybody is comfortable. A parent will hold on to it and hold on to it and hold on to it and say they’re not ready and, all of a sudden, the parent is ready and there has been no preparation.”

She has a neighbour who is very capable but his 89-year-old father won’t hand over the reins from his business. Another acquaintance is ready to quit her family’s business.

“’I’m ready to leave because I’m never going to be able to do what I want here,’” the woman told Muirhead. “And her parents are in their late 70s. It saddens me."

Transitioning a business to a family member doesn’t necessarily mean having them take over running it, Brushett said.

Seventy per cent of those surveyed, despite their misgivings, expect their business will stay under family ownership.

“What you see more of these days than you did 10 to 15 years ago is that ownership stays within the family and they consider bringing in non-family management,” Brushett said. “There is someone to run the business but the family are still involved because one of the unique and really great things about family owned business is the values of the family are extended into the businesses. They are connected and rooted into their communities and give back to their communities more than large corporations.”

But is keeping it in the family the best thing for the business or do the children actually not have the passion and skills to carry on?

“We don’t have good statistics in Canada, or even globally, on that," Brushett said. “There are more successful transitions than we think. Yes, there are challenges. But today, more than ever, there is help and support to make that successful.”

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