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5 Tips to Navigate Past Family Business Succession Planning Nightmares
If you run a family business, you have challenges many outsiders find hard to understand.
But you’re not alone. Family businesses represent approximately 60% of the jobs in America.
One of the issues that can seem more complex with family businesses than others is succession planning.
According to The Family Firm Institute, only about 30% of family businesses survive into the second generation.
Then, consider the following tips many business owners have found helpful when navigating the intricacies of family affairs:
Alignment of interests:
When you are relying on the company for your retirement income, the alignment of interests between you and those taking over the reins becomes more critical.
Start communicating your succession plan early. You’ll need the extra time to make sure everyone is on the same page.
All family members may not have the same goals for the business, and the situation can become complex when a divorce or death transfers stock or voting rights to a spouse that is not involved in the business.
Most disputes come from unmet expectations. Put in the extra effort so all stakeholders feel heard, and expectations are clear. Managing expectations early can prevent massive rifts later.
Estate or Inheritance issues:
Without planning, the death of a family owner can trigger taxes or probate delays that severely impact the operations of a business.
To avoid crushing surprises, your plan should take into consideration both the management/operational aspect, as well as the financial and ownership side of the equation. They are not always the same. Better to take the time and do the forward thinking now, than leave your family to unravel a mess later.
Sometimes it can be hard to stay objective when evaluating the performance or capabilities of a family member. And the bias can be both ways – some business owners don’t think the younger generation is ready to take over management, and others are blind to family member shortcomings.
Identifying your bias is a good starting point. Then do your best to treat the family member as you would any other promising employee and give them the training and support they need to focus on their strengths.
Bridging the generation gap:
Generational differences occur not only in attitude, but in communication as well. Disconnects can sometimes seem insurmountable or impossible to unravel, like a knot.
We highly suggest you get outside support – there is tremendous value in finding a partner that understands the alarm business and can keep everyone focused on achieving the business goals, rather than getting riled in the emotional aspects of family matters.
If there is a common theme in the tips above, it’s not to wait. Don’t postpone the succession planning process in an attempt to avoid these issues. The earlier you begin the process of transferring ownership to a successor, the more likely your succession plan will be a success, both emotionally and financially.
If you have a family-business, we’d love to hear from you – share your successes or help everyone learn from the challenges you’ve faced. What has worked for you? What have you found difficult to manage? Send your thoughts to email@example.com.