As a follow-up to my August 23rd Blog I want to share some thoughts that are unique to family-owned businesses and succession planning. According to the Family Business Institute, only 30% of family owned businesses survive into the second generation. Aside from day-to-day operational stresses, competing interests and emotions often come into play. Family tranquility and control issues often trump good business decision-making.
Succession planning issues in a family-run business can include:
· Determining if children are interested in taking over for parents.
· Selecting the right leaders from the next generation.
· Working through conflicts between children with varying degrees of interest/ability.
· Assuring lifelong financial security for the founders.
· Balancing comp & ownership amongst family and non-family key employees.
· If spouses work for the company, what happens in case of divorce?
· Assuring that children who don’t participate directly in the business are not left out.
In February 2016 the Boston Globe laid out five basic steps for family business succession planning.
1. Establish the value of the business.
2. When negotiating normal interpersonal dynamics must fall by the wayside.
3. At some point, negotiations must begin.
4. Compare the notion of a family to a third-party sale.
5. Close the deal and begin.
Many good, bad and ugly stories arise when researching the topic of family business succession. The BOSS System described in this article provides additional insights as to how you may want to proceed. Open and honest communication, along with a clear picture of your businesses value, is a great place to begin. Let Blaze ‘n Bear Insurance Services be your guide. Call us today at (805)635-7200 or email me at firstname.lastname@example.org.