A family business has unique considerations that do not exist with other businesses. They are special and require special attention at times. For instance, times of succession with a family business are not only critical, but are difficult to do dynamics that are not at play in other kinds of businesses. In fact, it is estimated that less than 33% of family businesses are able to survive the transition to the second generation. Even less survive the transition to the third generation. This can be difficult to hear if you have a family business. You pour yourself into your business and want it to remain in the family. The thought of this not working out can be devastating. With proper planning, however, you can help ensure that your business is successful and stays in the family.
Keeping Your Family Business in the Family
Working to keep your family business in the family is not something that just happens. It is something that requires solid, thoughtful, and extensive planning. The succession cannot be viewed as an event. It is a process. It is a process that happens over an extended period of time. Planning for succession is the same way. It is a process that must be done over time and revisited over time. This being said, establishing a solid business succession plan is one of the best things you can do to keep your business in the family. Putting a detailed plan in place that will address who will go on to lead the company, outlines procedures for the transition, and provides much-needed support to those family members who will be set to step into different key roles in the business can be invaluable. Failing to prepare those family members and other key business players for the succession can be extremely frustrating and lead to people walking away from the business altogether.
In addition to giving your business and the family involved with your business the gift of a solid business succession plan, fostering a sense of pride and loyalty to the business in your family will help keep the business in the family. Teaching the next generation about the business and why it is important to you is important. Educating the next generation on how the business is run is important. Keeping an open channel of communication by scheduling regular meetings with family members about the business can be a huge help. These meetings can be used to discuss family business, review plans for the business, and review the finances of the business. They can be status checks on how the business is feeling and how the family is feeling about the business.
Retain an independent advisor. This can really help a family business thrive and remain in the family. With family businesses, it can be difficult to keep personal issues out of the professional realm. To separate family and business when both of them seem so integrally combined is a struggle that most involved in a family business are all too familiar with. Have a trusted non-family member employee or an outside advisor on call that can step in when it looks like family dynamics are interfering with business decisions and operations.
Business and Estate Planning Attorney
At Monk Law, we provide trusted legal counsel in matters of business law and estate planning. The intersection of these two arenas is business succession planning. Our knowledge and experience with business law and estate planning make us proficient at establishing a business succession plan that you can trust. Contact us today.