Many founders of businesses dream of the day they can transition the business to their children. There is much in the literature that talks about the estate planning issues. Little is there that talks about what it takes to have a successful business that is transitioned.
I recently listened in on a conference call that dealt with the topic of stewardship. In the estate planning world this concept is usually focused on stewardship of family money.
I recently read a wonderful blog post by Barbara Taylor at the You’re the Boss Blog on the New York Times Site. She was talking about a book that was recently written where the author strongly thinks that children should buy the business from their parents. I don’t totally disagree with this idea, but I also like to leave room for other transfer methods of a family business.
I was thinking about the topic of entitlement the other day as it relates to the family business. Having the opportunity to join the family business is an opportunity that few children seem to take advantage of. Often children see their parents work very hard for a long period of time to get the business established. As a result they either don’t want to work as hard as their parents or often feel entitled to the goodies the business provides, but not have to work hard to deserve those goodies.
Parents often feel guilty for the amount of time they’ve spent building the business. To make themselves feel better parents will sometimes not put requirements for their children around material objects. If this is done to an extreme basis this can lead to a feeling of entitlement by the children. This entitlement can become a problem if the children join the family business.
A topic I see written about on a regular basis is the ongoing discussion about separating your personal life from your business life. For years I tried to do this and about fifteen years ago I gave up and have been much happier since.
Families that have a significant amount of wealth often ask the following question: “what can we do to pass money skills on to our children?” One of my favorite ways of answering this question is through using philanthropic planning as a method of teaching money skills.
Business owners are often asked to make donations to several charitable organizations during the year. Often these donations are made out of guilt and are not places the owner would really like to invest their money. In most businesses there is always a push and pull about where money should be invested and what the best use of that money is.