Block on Trump's Asylum Ban Upheld by Supreme Court
Guest post by Jennifer K. Halford, Esq.
I was recently preparing a presentation for my local Small Business Development Center about the steps a small business owner should take to ensure the next generation is ready to continue the family business.
I find that most small business owners underestimate the time it takes to continue the family business. They are busy and find it difficult to talk about what will happen when you pass away.
However, failing to plan for the transfer of the family business can result in heartache and conflict. I have seen many lawsuits of children fighting over their parents business.
So what steps should you take to ensure your children peacefully continue the family business?
1. Start planning now: Don't wait until you are ready to retire. It is devastating when a business owner dies unexpectedly and his family is not ready to run the business.
2. Talk about it often: Have regular meetings to talk about how to continue the family business. Honest conversations are key to ensuring there are no hurt feelings or confusion about everyone's expectations.
3. Recognize your children are not you: Not all of your children may want to run the family business. They may have gone to college and chosen a different career path. Talk with your children about their expectations and goals.
4. Separate ownership from salary: If one child wants to continue running the business and another doesn't, ownership can be split equally between the two. However, the child running the business should receive an additional salary and have an employment contract. Talk openly about this so no one feels they are treated unfairly or taken advantage of.
5. Start training now: Train your children how to operate your business. Make sure they understand the product, the business financials, and the day-to-day operations.
6. Decide who will run the day-to-day operations: The next generation may be too young to take over the business. Or perhaps they want to own the business, but don't want to run it. Hire and train a general manager to run the daily operations. Just be sure to define her role in a written agreement.
7. Introduce the next generation: The key to your business continuing is for your children to build upon the relationships you have developed. Take your children to important meetings. Allow them to start building trust with your vendors, employees, and customers.
8. Have your children do your employees' jobs: If you started your business from nothing, at one time you did the job of all of your employees. Teach the next generation by having them rotate through the business.
9. Plan ownership transfer: There are many different options for transferring your ownership interest to the next generation. Talk to your attorney and your accountant about the best way to transfer your business to limit gift and estate taxes.
10. Put it in writing: Put meeting minutes in writing. Memorialize each decision and transfer of ownership in writing. Share these documents with everyone to avoid future disputes.
A high percentage of family businesses do not survive the next generation. Take action now to ensure that your children are ready to peacefully continue the family business.
Jennifer K. Halford is an attorney whose practice focuses on business law and estate planning. She is also a professor at California State University, Chico, where she teaches Entrepreneurial Law.