First and foremost, setting open lines of communications and clear expectations for the leaders and family members is key. I often meet with family run businesses that have never discussed their succession plans or goals with the other members of their family, causing an unnecessary amount of unknowns for the future. If the conversations are difficult to begin, hiring a business coach to get lines of communication started can be a big help.

Along those same lines, a shared business vision for all the family members is vitally important.  This does not mean that the business can’t be nibble and adjust their business model but it does mean that you are all working towards the same goal.  Without a clear direction that the leaders are working towards alternate paths.

Avoid the handshake agreement; put agreements, visions, and expectations on paper.  Like all goals and contracts, once they are in writing there is more follow through.  It is easy for family business owners to make informal agreements because of the informal relationship.  However, one party may take more weight in the agreement than another and one might forget all together.

A phrase I find myself saying often to family run businesses is, “fair is not equal and equal is not fair”.  Just because there are several family members in the business does not mean they need to be paid the same for different work.  This can often result in unnecessary conflict between the family members.   It is also not a necessity for the family members to have equal shares in the company.  Remember, sometimes you need a final decision maker.  Be sure to treat hard work and development with the same respect you would a non-family member.

Finally, build a developmental track and proper training for the successor.  This may be accomplished by hiring an outside advisor who can provide a different approach to coaching than a direct family member can.  However, it is beneficial for the business to continue to be successful for both the current owner and the next generation.  Hoping that the traits of leadership and management develop is never a good plan.  Alternately, working to provide proper training can allow the next generation to step into those shoes with more confidence and knowledge to lead the business into the future.

A study of management practices, carried out by National Bureau of Economic Research Family Business Alliance. Retrieved February 2017:(http://www.fbagr.org/index.php?option=com_content&view=article&id=117&Itemid=75)

The family business sector in 2016: Success and succession. 2017 Pwc.com Retrieved February 2017: http://www.pwc.com/gx/en/services/family-business/family-business-survey-2016/succession.html

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Continuum Planning Partners Post Author
ABBY SPAULDING, CFP®

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