With the holiday season fully upon us, we may look forward to all of the upcoming family time (or maybe not). Regardless of your love or apathy for dinner with your parents and siblings, this time of year is the perfect time for having those discussions that are best had face-to-face. If you have a family business or if your family is considering business ownership – then there are some very important conversations you need to have. This is part one of a two part series that will highlight what your family needs to be talking about.
If you own a family business, you should be talking about exit strategy.
Have you had the exit strategy discussion with your family? Many family businesses haven’t. If not, then now is as good a time as any. This discussion should include decisions about selling versus handing the business down, decisions about what will be done with the money gained from selling the business, time frames for selling or retirement of the current ownership, etc.
A very big question? Do your kids even want to take over? Many parents just assume that their children want to and will take over when mom and dad decide to retire, but oftentimes this is not the case. Are your children capable of bringing the same passion and drive to the business you’ve had all these years? If not, then a very serious discussion needs to take place. See My Kids Are My Staff: Considerations For Business Sellers With A Family-Run Business for more.
Family run businesses need to look at payroll costs if the family members work only for tips or are otherwise “off the books”, as this skirting of payroll costs will affect the amount of money you will be able to get for your business. If you are discussing exit strategy, then you also need to discuss these types of payroll issues. Read Making the Kids Work For Free: Why the Family Business Looking To Sell Needs To Think Ahead if this is an issue your business will have when the time comes to sell.
If you are the younger generation in this discussion, then you need to do some reflection of your own. Do you really want to follow the same career path as your folks? Do you have other dreams but are agreeing to take over ownership out of a sense of duty or guilt? These questions and their answers will be critically important to the success of the business – as a business with an owner who has no desire to be there will surely fail. Read Should You Stay In The Family Business, Or Follow Your Own Path? to help you get the discussion with your parents started.
No one stays the owner of the family business forever, so having open and honest discussions about the exit strategy are crucial for determining the future of the business and the future of your family.
Do you own a family business, but aren’t sure your kids want to take over? Would you like pointers for getting the discussion started? Have you already had the exit strategy talk and have advice for those who haven’t? Please feel free to leave a comment or question here.
Want to read part 2: Buying Or Selling The Family Business – Part 2: The Written Agreement? Click here.
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