{"id":30,"date":"2019-09-18T11:04:11","date_gmt":"2019-09-18T11:04:11","guid":{"rendered":"http:\/\/enlightblog.com\/?p=30"},"modified":"2020-05-12T12:44:26","modified_gmt":"2020-05-12T12:44:26","slug":"family-business-101-succession-done-right","status":"publish","type":"post","link":"https:\/\/enlightadvisors.com\/blog\/2019\/09\/18\/family-business-101-succession-done-right\/","title":{"rendered":"Family Business 101:  Succession Done Right"},"content":{"rendered":"<p>Poorly managed family business successions have destroyed untold amounts of value in individual businesses and ripped countless families apart.\u00a0 Don&#8217;t let your business or your family fall victim to the same traps that have haunted business owners for generations.\u00a0 Even the most successful family businesses often fail to address two golden rules of succession:<\/p>\n<ul>\n<li>Plan early &amp; often:\u00a0 It&#8217;s never too early to plan succession in your family business.\u00a0 In fact, the longer you wait, the more touchy the situation becomes.<\/li>\n<li>Beware the 2-headed monster:\u00a0 Rarely &#8211; if ever &#8211; is it good for the business to have\u00a0more than one leader at the top.\u00a0 Resist the urge to placate your kids and make the right decision for the business.<\/li>\n<\/ul>\n<p>In our experience, there is a right way to manage a family business succession&#8230;here are some things to consider:<\/p>\n<h2>First, Determine the Family&#8217;s Needs<\/h2>\n<ul>\n<li>Ensure the family decision-making process is transparent &#8211; Who is responsible for making decisions on behalf of the family?\u00a0 How are the decisions communicated to the family?\u00a0 How does decision-making responsibility change as the family grows and\/or generations mature?<\/li>\n<li>Determine how the family wants to benefit from the business and revisit it over time &#8211; Is the goal to maximize the family&#8217;s wealth through the business?\u00a0 Or to provide other family benefits such as employment opportunities or a creative outlet for family members?\u00a0 How do the family&#8217;s needs\u00a0change as the family\u00a0evolves and the business evolves?<\/li>\n<\/ul>\n<h2>Then, Run the Business to be Successful<\/h2>\n<ul>\n<li>Set clear goals for the business and revisit them\u00a0over time &#8211; How can the business be leveraged to deliver what the family needs from it?\u00a0 What are the opportunities and limitations for the business based on the family&#8217;s needs?\u00a0 Which alternatives are most likely to deliver on the family&#8217;s needs?<\/li>\n<li>Establish clear factors for decisions about the future of the business &#8211; Based on the business goals, how should the business be run?\u00a0 What factors should drive decisions about the business?\u00a0 When is the right time to bring in professional management?\u00a0 Sell the business?\u00a0 Transition to the next generation?\u00a0 What attributes will the next generation need to demonstrate to\u00a0earn a role in management?<\/li>\n<li>Set up an advisory board to reinforce objectivity in pursuing the business&#8217;s goals &#8211; Which advisors (based on expertise and relationships to the family) are best suited to help guide the business through the inevitable family challenges?\u00a0 How are they empowered to ensure the business is well-run and able to address the family&#8217;s needs?<\/li>\n<\/ul>\n<h2>Manage the Family&#8217;s Role &amp; Expectations<\/h2>\n<ul>\n<li>Treat succession as a matter-of-fact aspect of managing the business &#8211; What are the factors that will determine who succeeds in management?\u00a0 How will the successor be selected?<\/li>\n<li>Educate the entire family about the business goals and succession process &#8211; What are the family&#8217;s needs that the business is fulfilling?\u00a0 How does the business deliver value for the entire family (spouses, the next generation, etc)?\u00a0 Why is the chosen approach important to the family and its needs?<\/li>\n<li>Develop clear guidelines for family member involvement in the business &#8211; When can family members work in the business?\u00a0 In what roles?\u00a0 With what preparation?\u00a0 What education or experience requirements are required to advance in the company?\u00a0 Who decides when or if a family member is employed, advances or exits the company?<\/li>\n<\/ul>\n<p>When you come to the fork in the road, make the best decisions for the business and don&#8217;t look back.\u00a0 If you have defined the business goals in the context of what the family needs, you will also be doing what&#8217;s best for the family.\u00a0 And, if you&#8217;ve effectively balanced the family and the business perspectives\u00a0by following the tips outlined above,\u00a0the\u00a0bulk of the\u00a0family will be supportive of the plan.<\/p>\n<p>It sounds easy.\u00a0 But,\u00a0the reality is that family business successions are hard.\u00a0 Very hard.\u00a0 Emotional attachments to the family&#8217;s legacy and emotional baggage from a lifetime of family ties (and sometimes drama) cloud judgment and objectivity.\u00a0 The sooner you start to plan for the transition, the sooner you can begin to bring balance to these perspectives.<\/p>\n<p>When&#8217;s the best day to begin planning your family business succession?\u00a0 The day you start your business.<\/p>\n<p>When&#8217;s the second best day to begin planning your family business succession?\u00a0 <strong>Today<\/strong>.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Poorly managed family business successions have destroyed untold amounts of value in individual businesses and ripped countless families apart.\u00a0 Don&#8217;t let your business or your family fall victim to the same traps that have haunted business owners for generations.\u00a0 Even the most successful family businesses often fail to address two golden rules of succession: Plan &hellip; <a href=\"https:\/\/enlightadvisors.com\/blog\/2019\/09\/18\/family-business-101-succession-done-right\/\">Continued<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[29,33],"class_list":["post-30","post","type-post","status-publish","format-standard","hentry","category-family-office","tag-small-business","tag-succession-planning"],"acf":[],"_links":{"self":[{"href":"https:\/\/enlightadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/30","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/enlightadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enlightadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enlightadvisors.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/enlightadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=30"}],"version-history":[{"count":2,"href":"https:\/\/enlightadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/30\/revisions"}],"predecessor-version":[{"id":308,"href":"https:\/\/enlightadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/30\/revisions\/308"}],"wp:attachment":[{"href":"https:\/\/enlightadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=30"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enlightadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=30"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enlightadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=30"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}