The decision to pass a family business on to the next generation is never an easy one. Aside from the timing, there are other issues to consider:
- Which family member will be “in charge” – especially difficult if there are multiple children and you are passing the business to the next generation.
- Who will be active and who will be passive “shareholders”?
- What role will you play during and after the transition?
While these issues are important, they are surface decisions at best. It is the right decision to start at the end.
The end of life that is.
Your business is far more than a building and other assets. Your business is a legacy, and that legacy has certain beliefs, tenets, and lessons learned that need to be passed along – besides just the assets. That is why some business owners and owners of family and closely held businesses are looking toward an ethical will. This is not some morbid document, but a testament to what you want done after you are no longer in charge.
The best family business consultants recommend making a plan as soon as you can put pen to paper. Legal consultants suggest the business plan be closely aligned with your will for estate planning purposes. While wills are important, the suggestion here is an ethical will. An ethical will digs deeper than “and junior gets Aunt Tilly’s vase.” It states the values you hold dear – the unassailable beliefs you have – and the decisions you want made beyond a lifetime. Did you appreciate humor in the workplace? Feel that casual Fridays are important? Celebrate company anniversaries with a big party? Believe that an employee was a member of an extended family? Then tell others to carry on these traditions that make your corporate culture what it is today.
While a static paper document may be needed for legal purposes, with technology today, hearing your voice and seeing your inflection for decades to come through audio and video may be what your business needs after you are gone.
Research shows that consumers have more faith in a family-run business than one that is not. Another curious issue involving faith is that family businesses tend to last longer when they have a faith component as part of the family business (think Chick-fil-A). Within that faith dimension are often elements that can and should be passed along through an ethical will. Was your company particularly generous to a certain charity? Did you believe in helping employees with tuition reimbursement or some other benefit, which flowed from your faith commitment? These need to passed down so the next generation can know your passion and beliefs and live these values.
The ethical will can make this happen. When looking to the future, all you need to do is start at the end.