| Many scholarly researchers have concluded
that a staggering 90% percent of family businesses fail by the third generation. This
sobering statistic becomes more perplexing when you consider the army of attorneys and
CPAs available to assist families with cutting edge business succession planning
strategies. However my own research reveals a glaring omission in almost every family
business succession plan: matters of the heart.
What Do Values, Morals, and Matters of the Heart Have to
Do With Successful Business Succession Planning?
Those few business families that manage the succession
process successfully have knowingly or unknowingly managed to pass on their values,
morals, and positive family heritage. If you talk long enough to any thriving second or
third generation business family you'll find they have, to a large degree:
- Embraced their grandparents' and parents' positive
heritage - Recognized the positive threads that run through their family that has led to
their personal and business success. - Realized how they too can benefit from these family
traits that they've caught over the years.
How to Successfully Preserve Your Timeless Values, True
Wealth & Your Family Business
1. Recognize your family’s core values
Unless you know what's important to you and your family,
you can't make sound business decisions that will impact future generations.
Here are some questions to ask yourself when considering
your family’s core values:
- Who was the most influential person in your life between
ages 10-15 and why? - What challenges have you faced, and what traits helped you overcome
these obstacles? - What does an abundant life mean to you?
When you uncover what has impacted you in the past and
envision your future, you can see emerging patterns that can help guide your business
succession planning process.
2. Create your family’s vision statement and family
history video
Once you've determined what's important to your family,
create your family's vision statement. This four to five-page document is specifically
designed to unify and preserve your family. To successfully create your vision statement
you must articulate what's most important to you.
Think of your vision statement as a guiding light for your
children, grandchildren, and future generations. Help them understand their unique family
heritage. Positively influence them to live fulfilling, meaningful lives.
Then create a video of the family history, where each
parent and/or grandparent tells their story.
3. Hold a Family Meeting
No matter how well you articulate your family vision
statement, it can't do its job if it isn't properly presented to family members. Guide
your heirs to self-discover the power and value of the family vision statement by asking
them a series of highly targeted questions, such as:
- If you received a check from your parents for $100,000
today, what would you do with it? - How have you seen your parents demonstrate the values
described in the vision statement?
4. Create a Family Council
The Family Council is a powerful tool to help build family
unity and cohesiveness through a shared vision of the family's purpose. Family members are
given specific duties and responsibilities, such as:
- Investigating how to invest family money together -
Identifying charities and causes that best align with the family's values - Setting up
future family council meetings - Establishing a budget and agenda
5. Get Your Team Involved
Now that you know what matters most to your family and
everyone is on the same page, you need to keep your attorney, CPA, stockbroker, insurance
agent, and anyone else assisting with your family business succession plan abreast of your
desires. Armed with a copy of your family vision statement, these various professionals
can help turn your desires into reality by using their unique skills to create strategies,
tactics, and tools designed to bring your vision statement to life.
Plan Today for a Successful Family Business
Succession Tomorrow
At this point, it would be normal to think you're okay and
your family succession plan will work just fine. That may be the case. But as you age your
influence will wane. Sons-in-law and daughters-in-law may not hold the same values and
morals dear that have served your family well.
As your influence declines, their influence will grow. That
is, unless you have a process in place designed to preserve your values, pass on your
wealth and help your family have lives of significance working in a thriving family
business. It could mean the difference between a thriving business that continues to bless
you and your family or a sad statistical footnote. |
