What to do with the Family Business after the Unexpected Loss of a Loved One
Losing a loved one suddenly is the single most traumatic event in a person’s life. It can be especially difficult when you’re pressured to assume the role of ‘business owner’ with no succession plan in place. But the truth is most family-run businesses do not have a succession plan. A recent global survey of 2800 companies across the globe by PwC indicates that only 23 percent have a succession strategy. Making critical decisions for a business you’ve recently inherited can be overwhelming, especially if your family’s future depends upon it. Here are a few pointers to get you situated while you decide if owning a business should be your next career move.
- Speak with a lawyer, accountant and a financial advisor, people who represent you and your family’s best interest. Try to get a BIG picture scenario about the business. Bring, review and discuss the following documents such as tax returns, insurance policies, financial statements, balance sheets, licenses, trademarks, partnership and operating agreements. Open communication with advisors can provide some stability amid the chaos. It can provide clearly-stated options regarding the short-term goals for the business. At the very least, knowing your full financial health can give you a clearer picture about future decisions, and clarify the idea of being a business owner to see if a change like that could actually align with your own personal and career plans.
- Meet with key employees to convey short-term business plans. Keeping in touch with current management means asking questions and collecting any information that can help you make business decisions easily in the short term, even if you’re not certain that a long-term position as business owner is for you. Also considering bringing in short term staff to assist while everyone is grieving and distracted with business and personal bereavement plans.
Also, uncertainty due to an untimely death brings disruption to employees as well. But with guidance from you, they can be certain that the business you’ve inherited is your top priority. Don’t forget any partnerships or customers you have. Reassure them that production and operations will continue to perform ‘as usual’. It also shows them that regardless of the setback someone at the helm of leadership is ready to steer the course.
- Develop a long-term strategy whether you decide to stay or sell the business. If taking over as owner of a business appeals to the entrepreneur in you, you’ll need to plan your next steps. You can’t run a business in survival mode forever. Having a long-term plan promotes stability and growth. Any business, regardless of its model, should have a strategic plan for transition of ownership and key financial targets.
- Consider all options before you decide to sell. You’ll want to weigh the impact of your decision not only as it pertains to your family, but the impact it will have on clients, employees and partners, too.Whatever direction you go, realize that it may take months or even years before a business sells.
- If you’re not interested in being a business owner, there are other options. You could sell your inherited share to partners or other owners, or sell the business to another party. There is also an option for a bequest or gift.
- Develop a succession plan moving forward. If you’ve decided to make a commitment to the family business, avoid the next generation from having to deal with the same situation you find yourself in today. If for some reason you find yourself hospitalized or worse, a succession plan can lay a defined transitional path for the next owner. In the plan identify managers and owners, company roles and if members of the family participate, and consider the support the new owner will need moving forward.
The Lynch Law Firm, based in Austin, Texas, is here to help you during these times of transition, please contact us today.
What to Do When Youʼve Unexpectedly Inherited the Family Business | SCORE, Bridgett Weston Pollack , January 19, 2018