Did you know only 30% of family-owned businesses make it past the first generation?
This past year challenged your family-owned business, but there’s light at the end of the tunnel. The current vaccination effort brings so much hope.
With hope comes opportunity. You have a chance to make your family business successful in the upcoming year.
Do you want to know how to succeed enough to pass your business on to future generations? Read on to learn the secrets for success.
1. Trust Between Family Members
A family business succeeds or fails based on the relationship of all involved family members. A lack of trust between you and another family member will fracture your business and your relationship.
Family dynamics rule family businesses. The challenge with family dynamics? So much of it lives under the surface.
Long-standing resentments bubble to the surface thanks to the stress of running a family company. It’s vital for your business that you have open communication.
If you have trouble communicating, get mediation before it’s too late.
3. Unity & Vision
Family business articles will tell you how growth is important for any business. You need a unified vision of expansion within a family operation. What does it mean to expand?
A unified business plan with a vision for sustainable growth will ensure your family business success.
4. Encourage Input from Younger Generation
A current trend in family businesses has to do with modern medicine. People are living longer, and that means they’re working longer. The older generation is now able to hold on to control of a business much longer.
Should you? If you plan on working long into old age, don’t push away the younger generation. Bring them into the fold early and value their input.
5. Succession Plan
Family conflicts as business transitions from one generation to the next can kill a business. Work out the plan early as to who takes control and when.
Negotiate a legal document between all parties that ensures a peaceful transition.
6. Structure Matters
Are you a sole proprietorship? Would it make more sense to structure as a limited partnership (LP) or a limited liability company (LLC)? There are a few differences.
Limited partnerships have general partners and limited partners. Limited partners invest and share profits but have no control over operations.
General partners within the LP structure are limited to one or two people who run the business.
Limited liability companies have an unlimited amount of investment partners. These partners craft an operating agreement deciding who gets input on operations.
LLC’s offer partnership flexibility because investors are protected against personal liability. Find out now whether your business should be an LP or an LLC.
7. Family Business is About More Than Money
It’s important to remember that a family business is about more than money. It’s about building a foundation so that future generations succeed. Unity, communication, and structure are the bedrock.
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