Many successful families accumulate their wealth through family business enterprises. If this describes you, you probably know that it’s difficult to achieve long-term success over multiple generations with a family business. Only a third of private family businesses make it through the transition to the second generation and less than half of those survive to the third generation.
Most family business owners spend a lifetime building their business, but they frequently neglect planning for transitioning it to the next generation. The common reasons are understandable:
- Some business owners focus so intensely on daily operations, they find it difficult to step back and plan for the future.
- Others feel paralyzed about the possibility that this type of planning will open a Pandora’s box of problems within their family.
- They worry about who might become resentful or angry if the succession plan turns out in a way certain family members don’t like.
- Still other family businesses don’t have a qualified successor, no vision for the firm once they leave, and no clear understanding of their own purpose after retirement.
Whatever the reason, having a formal transition plan in place comes with many benefits, including:
- Business owners can ensure that their successors are able to continue the business in the future.
- Business owners can often reduce estate and gift taxes associated with the business by funding a transition plan early.
- Proper planning can maximize wealth that’s passed on to heirs.
- Everyone involved understands what the future holds and greater family unity can be maintained.
Mentoring Business Founders and Successors
The DMG team has extensive experience mentoring founders and their successors in handling all issues associated with a private family enterprise. We educate and guide families to effectively handle concerns like conflict resolution, mission and vision planning, training the rising generations, as well as successfully passing the baton to them.
We accomplish this by collaborating with your team of advisors to develop a plan that aligns with the vision and skills of your family members. Our coaching includes:
- Helping families come together around a shared vision and mission for their family and their business.
- Solidifying succession plans and roles and responsibilities of all owner and non-owner family members, and non-family executives.
- Educating family members about different communication styles and effective communication strategies for each.
- Teaching family members how to identify conflict patterns that exist within the family, and how to achieve forgiveness and resolution quickly and reliably.
- Helping individual family members identify their passions and unique abilities so each person gains clarity about their ideal role in the business.
Families that successfully transition their businesses to the next generation and beyond typically have these things in common:
- They begin transition planning early (but it’s never too late to start!)
- They develop a clear vision and mission for themselves, the family, and the business
- They clearly communicate their vision and mission
- They embrace effective conflict resolution skills
- They anticipate and immediately address potential areas of conflict
- They properly prepare and mentor the rising generation
- They collaborate with experienced business advisors to develop a written business transition plan and execution timeline
Implementing these practices now increases the probability for long-term success, which creates a lasting legacy for your family and family business for the next generation and beyond. The experienced advisors at DMG are ready to help you take action now so you can start to enjoy the thriving family experience immediately.