Many family business owners fail to properly plan how to best grow and transition their business for maximum value and harmonious continuity. First Generation family business owners are especially vulnerable because the family successor component of their business often can’t relate to and fully appreciate the owner’s journey as a founder.
The result is that without smart continuity planning, the financial rewards that first generation family business owners deserve for their long and challenging life’s work can frequently be disrespected and discounted. Moreover, their family member relationships can become torn apart by greed and disputes with unhappiness and bitterness manifesting.
As a previous first generation family business owner myself, I’ve dealt first-hand with some of the continuity issues, and even more extensively as an advisor to other business owners as well. Based upon my experience, I can’t emphasize enough how essential it is that informed, advance planning be done to minimize experiencing potential undesirable outcomes.
Accordingly, important partnering, management, and hiring decisions should be made along the way with the longer-term end in mind to avoid having to undo disruptive, costly mistakes. Moreover, the people chosen for potential ownership, management, and employment should be qualified to operate the business without you necessarily being present on a daily basis.
As a family business owner, I had to make some difficult personnel changes in my business before I eventually assembled the right management team combination It was challenging both emotionally and financially. My saving grace was that by starting early I had enough recovery time for the decisions necessary to make corrections.
Another reason for starting planning sooner than later is because you need to plot ahead how best to “feather your nest” to ensure the financial well-being for you and your family, if or when you leave the business, either by an unexpected event occurring or by choice. To know what you would require personally under either circumstance, you must prepare a comprehensive personal financial and estate plan in conjunction with a strategic, value-building business plan.
By having a comprehensive personal financial plan in place, when you do seek to extract business equity, you’ll know specifically what amount is required to sufficiently fund your needs beyond the business. This is your Freedom Point and you’ll be able to knowledgeably respond to any possible buyer resistance to pay the amount you require.
Be aware that even family members as successors can be difficult buyers because they may feel entitlement without concern about causing detriment to your financial security and freedom. Advance planning is not only in your best interest personally, but it’s also for the beneficial interests of all others involved in the business when you depart, no matter what the cause or reason for this event happening, either voluntary or involuntary.
Today, as a previous first generation family business owner having sold my business, I utilize my experience to help guide family business owners how to build their business for maximum value and harmonious continuity so they might have the freedom as I now have, to do whatever they want, whenever and wherever they want, regardless of whether they choose to work or not. I utilized The Value Builder System™ and started by getting my Value Builder Score for the 8 key drivers that build maximum business value. I recommend that you do the same.