Success often comes with unique challenges in family businesses. Step two in the Succession Planning for Impact method, establish your succession planning team helps here.
James and John’s story illustrates the importance of succession planning and the value of outside perspectives in navigating complex family dynamics.
The Scenario: Imagine a thriving family business run by parents, with one son and his wife working in the company. Another son, living in a different city, wants to join the business along with his spouse. What should have been a story of family unity has turned into a tale of rivalry and competition, disrupting the family’s harmony to the point where they can’t even share a meal.
The Challenge: This family faces a common dilemma in succession planning - balancing family relationships with business needs. As I often emphasize in my book, “Succession Planning for Impact,” these situations require careful navigation and often benefit from outside perspectives.
The Turning Point: Recognizing the need for external guidance, the family reaches out to two faith-aligned business owners and myself. This decision aligns perfectly with Step 2 of our Succession Planning Process: Establish Your Succession Planning Team.
The Process: We meet with each family member privately, a crucial step in understanding individual perspectives. What emerges is striking - despite their differences, their primary desire was the same: to restore family unity and be able to share meals again.
This revelation underscores a key principle in succession planning - sometimes, the most important outcomes aren’t purely business-related. Defining your impact goes beyond financial considerations.
The family wisely keeps their initial planning team small. Having too many voices in the room can be a hindrance. They understand that they can always enlarge the team after deciding on a plan of action.
The Solution: Through our discussions, it becomes clear that financially and emotionally, there is only room for one of the children to remain in the business. The outside advisors help clarify their options, leading to a solution that addresses business needs and family harmony.
The outcome? The child living outside the city, along with their spouse, agrees to accept dividends based on current profitability and the proceeds of a life insurance policy on their parents. Meanwhile, the child and spouse working in the business will begin buying shares in and inherit the parent’s shares. This arrangement ensures equal asset value for both children while restoring family harmony.
After deciding on a solution, they enlarge the team to include their pastor, attorney, life insurance professional, and CPA to help in the transition.
Key Takeaways:
The value of outside perspectives: A small team of trusted advisors with experience in succession planning can provide invaluable insights.
Focus on shared values: When the family acknowledged their shared desire for harmony, their choices became clearer.
Creative solutions: Sometimes, the best solutions involve thinking beyond traditional business inheritance models.
Start early: Early succession planning allows for flexibility and smoother transitions.
Balance fairness with business needs: Equal doesn’t always mean identical in succession planning.
This family’s journey from conflict to harmony shows the power of thoughtful succession planning. By confronting their fears, recognizing their shared values, and seeking outside counsel, they were able to find a solution that preserved both their business and their family relationships.
In a word of thanks, the parents were thankful saying, “In the beginning, we were hoping you would make recommendations of what we should do but in giving options instead of recommendations…it helped us think about things we hadn’t thought of.”
Your legacy will be secured by beginning with strategic conversations. Whether you’re facing similar challenges or want to plan for your business’s future proactively, consider the value of establishing a succession planning team.
Are you ready to start your succession planning journey? Remember, it’s never too early to begin these crucial conversations. Your business’s impact and your family’s harmony may depend on it.
Harry T. Jones
P.S. We are building a waiting list for the next Cultivating Impact succession planning mastermind. We meet virtually as a group monthly and you have access to me privately. If you are interested in having eight others in your corner as you navigate leaving a legacy, email me at harryt@cultivatingimpact.biz.
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