Family is an important part of life for many people who live in Ontario. The nature of the relationship family members have with each other will vary from family to family based on a wide variety of circumstances including whether the members work together at a family business.
While arguably no one would agree to participate in such an endeavour if they did not feel that they were getting something from it, being a part of a family business can, at times, be trying. One situation that can be particularly difficult for family members to navigate is when it comes to determining how the business will move from one generation to another. In this post we will highlight three approaches that may help to keep things running smoothly while going through this process.
The first is to take steps to keep the peace. A big way to help keep conflict to a minimum is to make clear which role each person in the family plays in the business. While a succession plan is being created it can be a good time for people to consider where they best fit and the role they would like to play in the future.
Next, family members should understand that they may need to stretch themselves outside of the parameters with which they are comfortable to find ways to secure the financing necessary to grow the business. For the benefit of all involved, transparency regarding financial matters should be maintained.
Last, don’t be afraid to create the succession plan. The failure to do so could prevent a transition of the business from one generation to the next. One statistic puts the number of family businesses that end up in this situation at approximately 70 percent.
Because there can be a financial impact on a business when issues between family members arise, it is easy to see why it is important to keep conflicts surrounding succession plans to a minimum. To make sure the succession planning is handled correctly, it is a good idea to work with a lawyer.