Planning for the future is an important process for all companies, but it becomes even more crucial in terms of family businesses. Without a good succession plan in place, the future of a family business and its legacy can’t be secured. Despite this fact, a significant percentage of businesses aren’t preparing for their future, drastically reducing the chances of their companies surviving into the second or third generation. To prevent this from happening to your family business, here is how you can secure its legacy effectively:
Decide who will be included
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When communicating with your family members, transparency, honesty, and consistency will be crucial. The most important thing you will have to decide is who will and won’t be included in current discussions and the future of your family business. This will vary from one family to another. Some will decide to include only their spouses and children, while others may consider siblings as well. No matter where you draw the line, being open and consistent will allow you to improve the trust between family members and enhance the overall outcomes of your discussions.
Consider different perspectives
Once you decide who will be included in conversations, it can also be helpful to talk to each family member privately. This is especially important for gathering unfiltered opinions from younger individuals, as they might not always be keen to take over the family business as it is. Understand the most important factors to all generations, transform your business to secure its future, or remove family members from the discussion accordingly. In any case, certain adjustments will likely be needed to make your family business more appealing to the following generations.
Consult a legal professional
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Before meeting as a group, it can be quite valuable for each family member to privately consult a third-party advisor. This will give everyone the opportunity to share their thoughts and expectations without fear of arguments or retaliation from other family members while gaining some valuable advice in the process. It would also be beneficial to hire experienced wills & estates lawyers when planning for the future. These professionals can aid in the estate planning process, from business succession to other family assets, thus ensuring your affairs are in order and securing the legacy of your family business.
Start a family discussion
Use all the information you’ve collected through different individual conversations to bring family members together for a group discussion. Here, aim to develop a mutual understanding of the core values, principles, purpose, and legacy of the family business. This can also be a good time to identify any key issues you might want to address in the future. By understanding these areas of alignment, you can create a sense of collaboration and unity among the family and identify the main guiding principles you can use to secure your family business’s legacy.
Define values and purpose
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When you manage to come to a mutual understanding of the fundamentals of your family business, you can use these building blocks as an important guide moving forward. This can be particularly helpful when it comes to additional planning activities that could potentially be emotionally or otherwise challenging for family members, such as succession planning. It will be much easier to plan for and manage transitions when all family members know why and how difficult decisions have to be made.
Build a strong foundation
While clear succession plans are important for all family businesses, they represent only one small aspect of supporting long-term sustainability. Ensuring the family business is built on a solid foundation should be the main focus, along with all family members agreeing on the aforementioned guiding principles. When you work together to determine the business purpose, your family values, and the desired legacy, you will be in a better position to ensure your family business reflects the aspects that are most important to you and your successors in the future, regardless of who they might be.
Rather than focusing on hypothetical scenarios, bring your family to an agreement on the principles, purpose, and other factors that matter to you the most. Once all family members are united around a positive common vision, the legacy and future success of your business can be secured.
