If you own or run a business, you know how important it is to have a strong leadership team. Making smart decisions and keeping the business running smoothly every day is crucial for staying profitable and ahead of the competition.
In a perfect world, your siblings, kids, or grandkids would all be great at business and could take over when you’re done. But in reality, your family members have different skills and interests. Some might be ready and willing to take charge, while others might not be interested or skilled enough.
In my years of experience as a professional advisor, I’ve seen many wealthy families struggle with a big question: Should the business come first, or should the family? There’s no one-size-fits-all answer because every family is different.
For some families, the business is the main source of money, and its success is crucial for everyone’s financial well-being. Others might have big investments managed by a family office that matter more. Some families have lots of people who want to run the business, while others have just one person learning to take over someday.
These are some things to think about when you’re planning what happens to your business and your family’s wealth in the future. Talking about it in family meetings is really important to hear everyone’s ideas.
One good way to start is by making a family constitution. It’s like a set of rules that talk about how the business should keep going and how the family should stick together. Share it with your family, get their thoughts, and make changes based on what they say. It might take a few tries to get it right for your family.
If your family is more business-focused, you could set up a system to reward family members who work in the business and make money for everyone. For example, you can decide which part of the company they work in, set goals they can achieve, and give them bonuses when they meet those goals. Family members who don’t work in the business might get money from a family trust and a share of the business’s growth.
But if your family values being fair and sticking together more, you might decide that each family member gets an equal share of the money the business makes or a piece of the ownership of the business. In these families, it doesn’t matter if someone is great at business or not; they’re all treated the same way.
During these family talks, you might find that your family has different ideas about what’s most important. If you can’t agree, you might have to think about bigger changes, like selling the business. Before you do that, it’s a good idea to talk to an expert who can help find a fair solution that works for your family and your business.