Many family business owners are so busy running their business and taking care of their family that they don’t have time to sit back and think about the legacy they are trying to create. This can be dangerous for the family and the business. When you know what your legacy is, you make stronger decisions as a family, as owners and as leaders of the business.
Often first generation family business owners are founders who have spent their time growing the business and haven’t thought about the legacy they are trying to build. It is important to spend the time determining what your legacy is so you can make better decisions about the transition to the next generation.
Many second and third generation family members are so focused on continuing the hard work of previous generations that they don’t step back to think about their own legacy vs. their parent's or grandparent’s legacy.
Beyond the third generation, family business owners can feel disconnected from the original legacy and the people who started it all. They need to look at what the legacy has been in the past and determine how to make it their own
For all generations, decisions about who runs the business, how the business is run, ownership structure, estate planning and decision making are easier when you’re clear about the legacy you’re creating.
Here is a simple and straightforward way to determine what your legacy is.
Schedule 3 hours with all owners of the business and answer two questions. Your legacy is the answer to the questions.
The first questions is why do we continue to own the family business?
Ask yourselves why you continue to be a family who owns a business. You certainly could sell the business and have a less complicated relationship with your family members.
For some people their reason is to continue a previous generation’s legacy. Dig deeper. Why are you continuing their legacy. What is it about the legacy that drives you to move forward as a family business instead of selling the business.
Every generation needs to decide what their legacy is.
One of my clients, a fourth generation family business, continues to own the family business because they love giving entrepreneurial opportunities to their family. For them, continuing to own the family business is the best way to continue to give those opportunities.
The second question is what are we trying to create that will be here in 100 years?
For some people this could be a wing in a hospital, a new school, generational wealth, healthy families, jobs or recognition for the work of the family.
Just like the first question, it is important for each generation to be clear about what they are creating that will be here in 100 years. Previous generations had their own ideas of their legacy. I encourage you not to simply adopt the legacy of a previous generation which is a common trap. Look at this for yourselves.
The same client of mine wants to create good jobs in Minnesota.
When you put the answers to these two questions together they are a clear statement of your legacy.
When my client puts the answers to these two questions together their legacy is to create entrepreneurial opportunities for the family and good jobs in Minnesota.
Another Minnesota family business states their legacy as creating generational wealth so the family can serve their church, community and future generations.
When you know what your legacy is, it becomes more clear who should own the business in the next generation, which family members should work in the business, what kind of growth expectations you should have of the business and how you should make decisions as an ownership team.
- Schedule a three hour meeting with your fellow owners and answer the two questions.
- Share the answers with your advisers such as your CPA, financial advisor and lawyers.
- If you need help, contact me and I’ll help walk you through the firstname.lastname@example.org