Small family-owned businesses, farms and ranches are what give Colorado character. They are a source of jobs for local people, give back to their communities and often pay the taxes that keep schools and public service funded.
When you have worked so hard to make a business successful, what do you need to consider in a transition to the younger generation? What things can you control to ease this transition? In a series of blogs, we will provide tips that may help your family enterprise beat the odds.
Why don't more businesses survive past the second generation?
Most family enterprises don't make it to the second generation. Even fewer make it to the third or fourth generation.
The reasons are varied. Siblings might not get along or they might not have the same skills. A child who takes over the business with a wife playing a significant role, might get divorced. There might not be a process in place to deal with conflict or someone wanting to leave and start on a different path.
Planning: a process rather than one-time exercise
The good news is that you are reading this post and thinking about the transition from an individual venture to a multi-generational family enterprise. Planning that includes an experienced estate and trust attorney is one way to protect your enterprise.
This also goes to the first step - identifying issues that might cause problems. Baby steps is the frequent analogy. But consider that each of those first steps is a totally new undertaking for a baby that requires skills like balance and hand/eye coordination. While these initial steps are small, they require effort.
A candid conversation about family dynamics, the structure and day-to-day operations of your business and which sibling(s) may want to continue the business is a beginning. A transition must be viewed as a process rather than one-time event. You will need to provide leadership along the way.
In our next post, we will explain some of the decisions you need to make and then how you go about implementing them.