If you’re fortunate enough to own a small business, has your enterprise flourished into something a bit more complex than you ever would have expected? If this sounds familiar, you probably also have experienced a gradual shift in your responsibilities—from being a person in complete control to a manager attempting to oversee many facets of the business. And, if you’re like most small business owners, you likely have, at the very least, contemplated involving some of your family members in the business. Perhaps you even envision one of your children running your company some day. However, before you make your business a true family affair, there are several important decisions to be made. For instance, do any of your family members even want to be involved? And, who is best qualified for leadership and, ultimately, successorship? A good first step to answering these, and other, questions is to convene a family meeting together with your key advisors.
The agenda for such a meeting is relatively concise, but often complicated. The meeting should address such basic issues as: 1) which family members will be active in the business; 2) what roles will participating family members play; 3) what are the talents and expertise of each member; 4) how do family members interact with one another; 5) how will participating individuals be compensated; and 6) what will inactive family members receive? Your ability to entertain a variety of viewpoints and articulate your own interests is crucial to the success of these discussions.
From the initial and subsequent meetings, a plan should emerge that takes into account: your age and health; the expected growth rate of your business; and the ages, abilities, and interests of your spouse and children. The plan should initiate a process of designating your eventual successor, as well as the positions to be assumed by other family members. Although the conference should provide guidelines, your views will take precedence. In addition, such plans should be subject to modification as changes and developments take place within the business and your family.
As financial considerations come to the forefront (e.g., transferring ownership interests to family members), there are a number of complex issues that will surface. These often involve income, estate, and gift tax considerations. Thus, the need for financial, legal, and tax expertise is imperative if you wish to successfully achieve your goals and objectives.
In time, the family will probably function as a successful family business. Selecting a board of directors to carry the family enterprise into the future can be an important step to solidifying your long-term objectives. Consideration should also be given to the inclusion of non-family members on the board of directors to bring new ideas to the business. They may also be able to help mediate family impasses that may develop within or about the business. Ultimately, what is best for the success of your business, the needs of your family, and your wishes should result in a plan that moves everyone forward toward healthy future growth and accord.