Running a successful family business comes with a unique set of complexities for owners to balance. Among them is the personal dynamics of family members and how to form a strong foundation for the business.
Successful family businesses recognize that taking care of family relationships is critical to keeping the business running smoothly. To ensure this happens, they make time to hold regular family meetings or “retreats” that provide a safe place for everyone to share values, concerns and aspirations. The meetings should aim to be educational and yield plans to help the family move its business forward while maintaining family harmony.
Tip: Holding your first family meeting can be daunting. Don’t go it alone. Find someone who has experience in facilitating family meetings to help plan and run it. Set up rules of conduct and expectations that each family member agrees to follow. If done right, it can become one of the most fulfilling experiences for the family.
As we all know, the inevitable result of living is that we get older. All family businesses need to consider an estate plan for the company owners. Failure to plan for the business owner’s death is certain to leave the family and the business in desperate circumstances. No one likes to think about dying, but putting off such planning can doom the long-term sustainability of the family business to the detriment of the next generation.
Tip: Many times when a business owner embarks on estate planning, the focus is on an efficient, cost-effective ownership transfer. Don’t fall into that trap. Give careful thought to who should own which assets. It’s important to determine who is willing and able to ensure the business continues to prosper.
Savvy family business owners also plan for the unexpected, for when sickness strikes, accidents occur and life’s general unpredictability presents obstacles. Every family-owned business needs a crisis plan. This is different from an estate plan that puts the assets and control into the right hands. A crisis plan deals with who will be in charge if the matriarch or patriarch of the family or the CEO of the business is not able to carry out his or her duties for a short period, an extended period or at all. This is a plan that helps prevent confusion, battles for control and anxiety.
Tip: Take the time to discuss the different scenarios and to identify who is ready to step in during an emergency, or who could be groomed to assume the role. Consider competent people from outside the company or family who would be able to help guide the business through any difficulties. Then write the plan and share it with those who will be affected.
Ensuring healthy family relationships, planning for the inevitable and for the unexpected is essential to building a strong foundation for family-owned businesses.
Ultimately, it’s a matter of recognizing that taking care of family is taking care of business.
Chris Wilcox is the taxation and transition partner and co-founder of JW Advisors, a Las Vegas-based consulting firm specializing in business financial consulting, litigation support and forensic accounting, assurance and tax services. For more information, call 702-304-0405.