Family businesses face different challenges than other regular businesses, and it is all because of the ties between coworkers. However, these ties can also prove to be beneficial to the business and give them an advantage.
Here's a recap of the article:
Succession planning is a very important part of family business. How should it be approached?
THOMPSON: Succession planning is not something you wake up one day and decide, "Today, we're going to move the company over to the next generation." It's a process. The folks that have been most successful are thoughtful in terms of what their goals are for the business in the long term, whether it makes sense to try to send it to the next generation, to train people internally to run the company or to sell altogether.
I grew up on a farm. Every direction I looked there was someone related to me. Although I would look out and see all of my relatives located in different places in the distance, not all of them got along.
My great-grandfather originally purchased the farm [during] the Great Depression. He had four sons, and each of them ran an aspect of the farm. He died and had not done any planning whatsoever. They all went bananas, for a lack of a better legal term.
My great-grandmother was still alive. When she passed away, they couldn't get along and they broke everything up. That was my initial experience with family business.
My great-grandfather wouldn't talk to anybody about it. He was never going to die until he did suddenly, and it threw everything in turmoil. The most valuable thing you can do for your family is think through these issues before it's too late.
It's OK sometimes if the business isn't going to stay in the family.
My father did not farm. He opened an equipment company that basically handled anything smaller than large tractors and sold them. He continues to operate that company. I'm the oldest of five kids. None of the five of us went into that company. And that's OK. Everyone's happy. Everybody chose their destiny.
BADR MORGAN: One of the things that family businesses struggle with is feeling comfortable putting structure in place, because you have learned to communicate as family members instead of as colleagues. You have to either adapt of completely break away from that and find a different kind of communication. And then you have to say, well, if it was my friend or neighbor or some third party, I would call a lawyer or figure out how to work the structure of the company and put some documents in place that talk about what happens when someone dies, or if there's a fundamental disagreement. But it's my husband and my son and my uncle. I don’t want there to be this notion that there's distrust.
Joanne Badr Morgan is a commercial real estate attorney whose practice focuses on representing banks and other financial institutions in commercial loan transactions. She also advises clients on a broad range of business law matters including the formation and structuring of new businesses and investment entities, business transfers and acquisitions, and contract drafting and negotiation.
Matt Thompson is a board-certified specialist in Estate Planning and Probate Law. He has experience working with closely-held business owners on succession planning, tax, and other issues.
The roundtable discussion, presented by Business North Carolina, was hosted by Ward and Smith's Raleigh office. To read the rest of the article, click here or download a copy here.