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;
recognised the positive threads that run through their family that has led to their personal and business success; or
realised how they too can benefit from these family traits that they've caught over the years.
Preserving Your Family Business Values
1. Recognise 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 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; and
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 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- 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.
* Jeff Harris is a family business succession expert and is dedicated to empowering families to preserve their timeless values, protect their true wealth and create treasured lives of significance for themselves and their loved ones.
Take Jeff’s Free Family Business Succession Quiz at www.familyfl.com/thequiz.html
* The opinions expressed in this article are those of the author, and don’t necessarily reflect the opinions of DYNAMICBUSINESS.com or the publishers.