Family Business Succession Planning
Family and business makes for a complex mix, essentially because of conflict of interest. At any time, those involved wear a mix of ‘hats’: family, owner and employee. This sometimes makes decision making very difficult: what comes first – family or business? Do we give family members a job even if they don’t deserve it? What if they aren’t performing? How much do we pay them? At the appropriate time, do we gift the business to them, sell it to them, or just sell it for cash?
Depending on which ‘hat’ you are wearing, you may have very different answers to these and many other questions relating to the family business.
While it’s very hard to separate these parts of ourselves – for example it’s hard to just be the the boss and fire a family member who isn’t performing – we can maintain an awareness of the spill over effects to the others hats we wear, and to the family at large.
When approaching these complex decisions, it can be helpful to consider what they would be wearing each separate hat, and then weigh up which hat is most relevant, and the wider implications of the decision. Having externals at the decision table can help clarify which hat are influencing decisions, as family members are highly subjective.
Consider This: Does your family have policies regarding family members and any operating assets? Do family members have to pass a bar to gain employment? Are they paid market salaries? Do you account for the increase in value created by some family members working in the business?
- How to Fire a Family Member in a Family-Run Business
- Merit or Inherit: How to Approach Succession in a Family Business
- 10 Reasons Why Your Kids Probably Won’t Take Over the Family Business
- Why it’s a good idea for family businesses to form boards
- 12 Family Business Heirs on Navigating their Way
- Four Considerations When Passing The Family Business To The Next Generation
Here is more on reading on family business succession planning.