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Strategic planning for families in business
Farmer's Weekly
|April 16, 2021
When carrying out estate planning, a family business owner may be concerned only with who will inherit the business and how it will be transferred. More is required, says Trevor Dickinson; planning has to consider the family’s desires and intentions for the business, as well as strategies for the future of the operation.
In most families, members tend to avoid prickly issues, sweep problems under the rug and keep unpalatable secrets from each other, all in an effort to prevent conflict. This may work in a family, but cannot be used in a family business. Proper planning, and transparency, are crucial.
Statistics suggest that a family business has only a one-in-three chance of reaching the second generation, yet few business founders believe that theirs will be the one to fail. The reasons why so many family businesses don’t survive have to do with the ways that family considerations can overwhelm business realities and the consequent lack of focus on the need for business renewal.
This dynamic arises from the unique quality of the family business, in that people from different generations of the same family may share management and ownership of the business.
Not every family member inherits ownership and not every family member works in the business. But those who do, or want to, often make their decisions based on personal rather than business considerations.
The key challenge in planning for the family business is helping the family negotiate the boundary between the world of the family and the world of the business. If family members agree on an approach to cover these areas, the possibility of destructive conflict is diminished. To achieve this, the family can use two overlapping, interrelated, but quite different planning teams.
The first is a council of family members whose tasks are to deal with the business of the family, develop a new generation of family members in the business, regulate the members’ involvement, and align the business with the family’s plans. The council expresses the will of the family in relation to its business.
This story is from the April 16, 2021 edition of Farmer's Weekly.
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