Another interesting finding is that over 75% of family business owners plan to pass their business on to the next generation, up from 55% from two years ago. But two issues can challenge prospects for growth and transition. One is difficulty acquiring talent. The other is lack of a documented and updated business succession plan.
FINDING THE RIGHT PERSON FOR THE RIGHT JOB…
Hiring the right person can be a difficult thing to do, especially if a business seeks people with unique skills or a set of skills that few people hold. Talent acquisition is expensive for all businesses. And it can also be risky.
When a small business brings in key employees, it usually gains a valuable team player and contributor. But it could also unwittingly bring in a predator and eventual competitor.
Such an employee will have access to much of the businesses’ proprietary information. Such proprietary information can include business processes, customer lists, vendor lists, pricing sheets, and other unique and valuable information.
Small businesses (and large organizations) can protect themselves with properly drafted employment contracts, confidentiality agreements and covenants not-to-compete. And all of these documents can be contained in one agreement.
SOMEDAY, (SON OR DAUGHTER), THIS WILL ALL BE YOURS…
Most family business owners wish to pass on their business to their children. Some business owners know that their children have no interest in the family business, but do want to pass on the value of the business to their children. In either event, a transition plan must be put in place. This succession plan involves estate planning, tax planning, and sometimes transitioning the business or an outright sale to outside interests.
AND THEN THERE ARE THE BUSINESSES OWNED BY MULTIPLE SIBLINGS OR CLOSE FAMILY MEMBERS…
One of the jokes the Author remembers from law school was an alternate (albeit prejudiced) name for Business Organizations class was “Family Law for (entrepreneurial ethnic and religious group).” It was a stereotype joke, but there is a hint of truth in the joke. Small business law, in many ways, is “family law” for business-owning families. Transitioning a business from one generation to another where the business is owned by siblings or close family members should be carefully planned to avoid disputes that can paralyze the business, provide that the business will remain in the family, and provide financing mechanisms to ensure that the remaining family members can fairly compensate the exiting family member. And on a more human level, to keep money from breaking families apart.
Clear business succession planning saves money, jobs, sometimes taxes, and hard feelings.
If I can be of service to you in helping you with any of the issues raised above, please call me at 260.755.0873 or email me at firstname.lastname@example.org.