Prepared by: Jerry Aliberti, Owner of Pro-Accel

Surviving and thriving in the construction business is no walk in the park! Passing the family business on to the next generation should be a moment of pride. But let’s be real: it is a challenge loaded with all sorts of fears. Fear of letting go, fear of change, and the fear that the legacy might not continue as envisioned.

Original owners started as hands-on owner-operators, putting in 60-plus hours from Monday to Friday each week and then sacrificing weekends for back-office work. Many ball games were missed, and vacations were spent worrying if the projects were on track. Working hard is practically in their DNA, making it tough to loosen the reins.

Having been in the construction business for over 20 years and having chatted with many contractors nationwide, I have noticed a common trend of emotions and challenges that people experience when going through the process of passing a family business on to the next generation. In this article, we will dig into the emotional journey of older-generation construction owners as they grapple with passing the torch to a younger, more tech-savvy, but less experienced generation.

The Battle to Let Go

I have spoken to contractors who were losing most or even all their profits. The younger generation wanted changes for more efficiency. They were looking for solutions outside the company. The older generation resisted, fearing any change could sink the ship for good. It is crucial to understand that all successful businesses must adapt to current times to stay ahead of the competition. The cost of inaction will only compound your losses.

Imagine building a construction business from scratch, pouring sweat and dedication into every brick and concrete pour. Now, you are at the point where you need to hand it all off, and that is a move filled with fear and doubt. The daily grind has become your way of life, and letting go feels like stepping into the unknown. It is a challenge packed with uncertainties and concerns about whether the younger generation can carry the torch forward.

Generation Gap in Management Styles

One significant hurdle lies in the differences in management styles. The older generation shaped the business with certain values and methods, which may clash with the younger generation’s approach. The fear of letting go stems from uncertainty about whether the younger leaders will steer the ship in the same direction or forge a new path. Older generations may run the company with an iron fist, with an “it’s my way or no way” approach, and with a lack-of-trust attitude while the younger generation is more open to collaboration and receiving outside opinions. Trust and relationships are also viewed differently.

Concerns About Readiness and Commitment

Older owners worry about the younger generation’s readiness for leadership roles. Leading people to success is crucial, especially in construction, where there are so many large personalities. The construction business demands a constant sense of urgency and commitment to stay on top. The truth is, you won’t know the next generation’s leadership abilities until you start letting go and allow them to prove their capabilities.

Emotional Attachments

Beyond the fear of change, emotional attachments play a significant role in the hesitancy to let go. The family construction business is more than just a source of income; it is also a legacy and a symbol of identity. Passing it on signifies not just a transfer of ownership but also an overwhelming emotional transition that can be hard to navigate.

Navigating the Technological Wave

One key difference between generations lies in their approach to adapting to new resources. The older generation may find the influx of new tech and external resources overwhelming, and they may even feel afraid of it. The fear comes from unfamiliarity, as they deal with the idea of their “kids” utilizing these modern resources.  The fact remains that change is hard and younger generations have a proficiency in migrating to newer systems, advanced technology and revolutionary innovations.

The Power of Strategic Planning

I strongly advocate engaging in annual strategic planning. This process not only facilitates the smooth transition between generations but also serves as a valuable platform for collaborative discussions on long-term goals. This provides a comprehensive snapshot of the company’s current status and a roadmap of how to implement necessary changes for future growth while keeping the company’s core values in place.

In addition, by gaining a thorough understanding of strengths, weaknesses, opportunities, threats, aspirations, and goals, you position your company well ahead of the competition.

This approach allows you to take on projects that align with the capabilities of everyone within the company, ensuring profitability in your current position. In addition, it provides a roadmap for each year, outlining the necessary steps to achieve long-term objectives and breaking down larger goals into smaller, manageable tasks. Once again, this is a great way to collaborate and communicate effectively and combine different thoughts for the future of the company.

In Conclusion

Change is unavoidable, especially in the dynamic world of construction. It is crucial to adapt to the evolving landscape swiftly. What propelled your business to a $5 million annual revenue will not be sufficient to reach $15 million and beyond. To handle the increased workforce and larger projects, a shift in skills and processes is imperative.

Many companies experience revenue growth without upgrading the essential components of their operations. This includes the shop’s management, deficient processes, insufficient technology for operational efficiency, unchanged employee task delegation, outdated hiring processes, and poor resource allocation. Keeping these aspects stagnant while revenue expands introduces considerable chaos within the company.

Employees seek structure and desire to witness a seamless transition not only across generations but also in the company’s growth, executed efficiently and responsibly. As your business scales, resist the temptation to cling to outdated habits and approaches. Instead, view change as an opportunity for growth and enhancement.

Despite these challenges, effective succession planning, open communication, and an understanding of each generation’s strengths can create a smoother transition.

Recognizing that the younger generation brings fresh perspectives and can leverage modern resources can ease the fear of change. Recognizing that the ownership generation holds valuable experience, business acumen and practical way of thinking through challenges can prevent excessive risk for exposure from abrupt change. It is a delicate balance between tradition and modernization with an end goal of ensuring the legacy lasts for more generations to come.