Tuesday, June 19, 2018
Getting married. Having a child. Purchasing a home. Starting a new venture. You don’t go into these significant changes in life without some forethought and planning. Significant transitions require preparation.
Preparation for significant transitions in a family business is no different, whether it is a transfer of assets, transition of ownership, develoment of the next generation for leadership, or fostering sustainable business leadership.
How frequently do family business leaders secretly wonder: “Are we ready? What are we missing? What have we not adequately addressed?” For families in business, there are two unavoidable issues that arise: (1) maintaining a strong, viable enterprise; and (2) keeping the family committed to and capable of leading.
To be successful as the family and entrprise grows requires preparation in critical categories:
1. Family:Preparing the family enterprises to survive long term means living family values, discussions of who the family is, how they act as a family and nurtuing relationships in the family.
2. Enterprise Ownership:The family avoids conflicts of interest or self-serving decisions by clearly defining boundaries, policies, and shareholder agreements.
3. Enterprise Governance:Sustainable family enterprises have strong governance that closely monitors performance and compliments the family’s knowledge, skills, and abilities with strategic perspectives of qualified outsiders.
4. Wealth Managemet:By diversifying risks and providing liquidity opportunities, successful wealth management helps preserve harmony and goes beyond the core holdings or legacy enterprise.
5. Philanthropy:Charity is an important element that can unite the family and the enterprise. Sharing wealth, as an act of social resonsibility, can unite the family and demonstrate core family values to the next generation.
Many companies begin as family businesses, but only those that do the hard work of continuous planning and preparation for the future will endure and prosper as a family business in the future.
SKM Associates is able to walk with your family and help guide the important work of planning, preparing, and implementing.