Transitioning your business from one generation to the next takes an average of eight years. Answering the following questions as an ownership team improves the chances of your family business succession going well. Answer these questions based on your ownership structure and legacy - not the day-to-day leadership of the business.
What are the ownership group’s core values? These core values help guide the kinds of decisions you make as an ownership group. If you look at the story of how the business was founded you will often see the core values of the ownership team.
What is the legacy you’re building? Your legacy is a combination of two things:
● Why you continue to own your family business
● What you're creating that will still be here in 100 years
What will things be like in ten years? As an ownership group it is important to understand who will be running the business day to day, how the founder will be spending their time and who will have ownership of the business.
What is your ownership philosophy? There are several questions that are part of your ownership philosophy. The answers to these questions should align with your values and the legacy you’re building.
● What does it take to be an owner of the business? Do you have to be a certain age? Do you have to work in the business? Do you have to lead the business? Do you have to buy stock or is it gifted? Can step-children or adopted children be owners? Can spouses be owners?
● Do you have requirements for family members to work in the business? Do they need a certain level of training or education? Do they need to work elsewhere before they work in the family business? Do they need to get a promotion at another business before joining the family business?
● What is your ownership approach to growth and profit? Are you aggressive about growth or not? Do you have certain expectations for profit? Do you expect distributions for owners? Do you expect profits to be invested in the business?
● How do we make decisions as an ownership group? Do we have a board of advisers or directors? Do we have a family council? Do we vote on decisions? Does the majority stockholder make all decisions?
What needs to happen in the next three years? In order to be on track for your 10 year plan, what needs to happen in the next three years?
What are your one year goals? Define five or fewer things you’ll get done in the next 12 months to get your ownership group one year closer to your ten year vision.
What needs to get done in the next 90 days? In order to stay on track with your year-long goals, determine what needs to be done in the next 90 days. At the end of 90 days, repeat this process throughout the year.
What issues will get in the way of accomplishing this plan? All families, businesses and ownership groups have issues. Write them down and find a systematic way to work through them.
Answering these questions as an ownership group typically takes two full days of discussion and debate. Some ownership groups can do this on their own, others need the help of an outside facilitator.
- Contact me if you would like help answering these questions (612) 220-6559 or firstname.lastname@example.org
- Finally, Take the answers to these questions to your trusted advisers and make sure your estate plan, will and buy/sell agreements align with the legacy you’re trying to build