Family Business Today Blog
I wish it were routine to ask a family business owner about their board of directors and get the kind of answer that leads to lasting success.
It would go something like, “Oh yes, we have a great board. We deliberately brought in people outside the family, and they gave us sound advice. We meet quarterly, we compensate them for their time, we arrange all their hospitality, and even some entertainment once business is concluded. They are vital to our success.”
Why Is taking care of #1 Important?
Let’s cover the obvious – once you let go of the reins of your business, it belongs to someone else. Even if that “someone else” is your own child, they are now free to make decisions with what is now their business that may directly conflict with your hopes or wishes.
In a family business, the idea of having a board of directors might seem like overkill, or an expense you can’t afford. Most companies don’t bother to get one until they pass $50 million in revenue–which can be a big mistake, with a heavy price tag.
To be fair, it doesn’t seem like the most important thing when you’re in startup mode…
Well, if you’re reading this blog, you’ve probably heard…We just finished one of the ugliest and most emotionally-charged elections of my lifetime.
President Abraham Lincoln described our country as a fortress. It would never be destroyed from outside, but only from within. I fear the “fortress” built for us is at risk…
Family business owners face unique challenges…and they also tackle those that affect all businesses. Sometimes, they can kill two birds with one stone – especially when it comes to creating a transition plan.
When I discuss transition with clients, I always like to point out the obvious – 100 percent of us will transition, whether we want to or not. All of us get old, decline, get sick, or have some other issue in the twilight years of life. But it doesn’t have to be that severe. A change in the direction of your family business can leave you miles behind in the dust…
Family business owners often get tangled up with being “fair,” especially when they make their children stockholders in the business. We get the question often: “Should we pay bonuses, or dividends?”
Unless you are good with the numbers and tax law you should turn to a CPA or tax attorney for help. That is a good place to start, because bookkeeping and staying current with the tax man is no laughing matter…
Harvard Law School’s Negotiation Program has some famous stories. I was surprised to come across their research into several business conflicts between the three surviving children of Dr. Martin Luther King, Jr.
In his most famous line from his most famous speech, Dr. King dreamed of a world where his children would be judged by the content of their character, instead of the color of their skin. I say “Amen” to that…
Buy-sell agreements are an essential part of your personal and business estate planning process. They may not be the most “fun” part, but they get a lot of hard questions answered in writing.
It’s your opportunity, along with the members of your family who own the business, to figure out what you will do as a family in any given situation. The more owners there are, the greater the need for you to make the company’s plan legally clear, in a way everyone agrees to.
One thing that’s bound to cause a stir in planning the future of your family businesses is what’s “fair” versus what’s “equal.”
It’s common for family business owners to want to distribute ownership to their children equally when they pass, just like any other asset. But unlike cars, houses or your financial portfolio, a business may mean far more to one child than another.
Tennessee Center for Family Business, 610 North Garden St BSMT,
Columbia, TN 38401, United States
(O) 615-513-9028 info@tncfb.com
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