Ten Things to Build a Stronger
Business for Transition

Let’s face it. Few of us know for sure when we will exit our business or under what circumstances. But one thing is for sure. The better we prepare for it the better off we will be! What can we do to get ready? Here are "Ten Things YOU can do to get ready before you start packing your bags". Starting with #10…

#10- Well-Informed Family Members. Make sure family members take part in family mission statements, family education projects, family histories, board of directors, strategic planning, philanthropic efforts, shared vacations, etc. It is important that there be open communications, trust building and time for bonding. Conflicts and succession difficulties usually arise because family members are not "in-the-loop".

#9- Hold Family Meetings. Meetings are a powerful medium for strengthening the family and the business. They are the best way to help family members discover and build on the common ground that unites them. Family meetings also give individual members a chance to develop such skills as leadership, conflict resolution, listening, financial skills and management accountability. The meetings should be regularly scheduled in whatever timeframe is convenient for you and your business.

#8- Establish a Family Code of Conduct. It is important to establish a family code of conduct for family members in business to follow that clarifies and guides behavior as to what is appropriate and not appropriate. For some families, codes of conduct become the rules or bylaws of what is acceptable in meetings for example. Examples are (1) family members should treat each other fairly and honestly; (2) shareholders will not sell shares to outsiders.

#7- Planning for Future Ownership. All family businesses reach crossroads when major decisions arise about the future business, the owners’ estate, leadership succession or the role of the family in the business. All of these issues should be the subject of careful planning efforts. And none of them can be resolved in a vacuum. Start early and you’ll be ahead of the game.

#6- Planning for Family Participation. The role of family members in the business is an important and complex issue for most businesses and I am sure yours is no different. Are in-laws welcome? Are they the out-laws? What preparation, if any, is desired? How should family members’ titles and authority be determined? How old is too old to enter the business? Should family members be permitted to hold summer jobs? What if a family member doesn’t work out as an employee? How do I fire them? Tough issues aren’t they?

#5- Managing Inherited Wealth. A major concern for many business owners is what is all of this success and wealth going to do to our kids? Is it going to spoil them? Family meetings can be an excellent means for infusing the important values and responsibilities for the next generation. They can also eliminate perceptions of entitlement.

#4- Launching the Succession Process. The selection the next leader of the family business can be your greatest achievement to date. Family meetings provide a vehicle for informing members about how the succession process works and how a decision is made. Explaining the succession decision as the result of an objective, thoughtful and orderly procedure, with a planned development program, criteria and goals, can do much to avoid misunderstandings and resentments.

#3- Preserving the Legacy. Some families begin meetings to record and save the family history before it is lost forever. In some families, one member- such as a retired founder or another member with a special interest carries the responsibility of leading a series of regular reunions or other social gatherings with branches of the extended family. What is most important is to ask yourself; what matters most to preserving and sustaining our family business?

#2- Recognizing Conflict. If quiet disputes over the business, family participation, succession, and family members’ roles in management or other issues- are allowed to fester and grow, they can divide a family and hurt the business. Family meetings as well as use of family business advisors can help air and resolve differences before they become crises. A key to successful conflict resolution is for family members to acknowledge conflict early in the process and to realize that it is normal – not something to hide or avoid.

#1- Professionalizing the Business. As the family business grows, recognize that overcoming parochialism is a challenge for many to overcome. Seek out advice from others. Consider using Board advisors and/or outside directors.

In summary, as you think about transitioning your business down the road, consider the ten things I have just shared as factors that will help you to build a stronger business, regardless of when or how you should decide to exit your business.