Are Family-Owned Businesses a Dying Breed

This country was once rooted in the family-owned-and-run business. The country once grew and thrived on these businesses and they were handed down from generation to generation, but are they becoming a thing of the past?

For many small tackle shops, being a family-owned-and-run business is a source of pride. Talk to a few owners and they will tell you how their father or grandfather started the business and how it is still thriving under their leadership today. So why could family-owned businesses be dying off?

It is not because of the buying habits of modern day shoppers switching from brick and mortar stores. Most family-owned businesses are offering online shopping. In fact, there are many small family-owned online stores doing quite well. It isn’t because of the economy or because of our government.

The reason why family-owned businesses are a dying breed is because of poor planning on behalf of the owners themselves. In case many of you haven’t noticed, the world many of us grew up in is no longer the world we live in. There are more laws now governing business than there ever have been. There are also more laws governing death and the distribution of the deceased’s assets and the taxes on them. While planning for the succession of the next generation of ownership is uncomfortable for many, it is also a necessary discussion many do not take part in.

To get started, you need to realize that no matter how much no one wants it to happen, someday a new owner will need to take the reigns of the family business. The sooner you accept this fact and make plans, the sooner you can rest at ease knowing everything will run according to your plans.

Prepare
For those of you who are the owners, or those who wish to continue on with the ownership of the family business, you need to start your preparations now. None of us can see what tomorrow will bring, and unfortunately the planning we put off until tomorrow always seems to be the planning we needed to do yesterday. The sooner you start, the better prepared you will be when that day comes. It will also make it easier to go back and make revisions if needed, or to break the conversation up into smaller sessions. If family members from out of town are needed to sign off on documents or their input is needed, now may be a good time to schedule a discussion over the upcoming holidays later this year.

Sit down and discuss what makes your business so successful and what the core values are today. Who should take over as the business owner; will other family members be silent partners and receive a piece of the income, if so how much? Will the ownership of the property change hands, if so, to whom?

Consider creating a family charter as well. A family charter is nothing more than a written agreement among your family members regarding the family business. The charter will define which family member(s) will take ownership of the company, who will have a voice in the business decision making and employment decisions, along with what monetary allotments will be made monthly, quarterly or yearly to each family member.

Make It Legal
After you have discussed everything with your family members, sit down with an attorney and have it legally written up. There may be questions you did not think of, or situations that could occur that were never discussed. This may not be a quick legal session, so be prepared for it. Talk with your family members and let them know that things may need to be changed or re-written for everyone’s benefit, namely the businesses’. Discuss any legal questions you have with your attorney. This is the business you have spent decades building – take the time it deserves now to ensure its success. If you took the time to create the family charter, have your attorney look this over as well to ensure there are no loopholes or voids in your planning.

Look Outside the Family
Not every family wishes to hold on to their family’s business, and many family-run businesses have key employees who have been loyal for years. If no one in your family wishes to see the continuance of the business, see if your trusted employee would like to take over ownership of it. If so, see if you can set up a plan to have him or her start buying it from you now, making smaller payments throughout the years and slowly taking over ownership of the business. It will save them from having to acquire a large sum of money at once, and will give them more pride in their work.

If there is no one who currently exists within your business or family who wants the store, consider hiring someone new who would want to take over ownership. This may be the most risky venture, but it could pay off in the end. Many times someone outside of the business will have a fresh perspective on things and could jump-start your business into being more profitable.

If you decide on either of these ventures, consult an attorney before you begin. This will make sure everyone knows their limits and keep someone from overreaching their boundaries.

No matter who takes over your business in the coming years, it is a hard proposition to accept and realize. This is what makes a family business so wonderful though; the business has become a member of your family and needs to be thought of after you are no longer able to run it. Give it the consideration it deserves and a lot of time to plan for its next owner. It has been good to you, good to the community and surely has seen many new anglers created because of its existence. Hopefully your community will see it pass on to the next generation many decades from now, just like they saw you continue its growth.

What plans have you made to see that your business continues on after your retirement? What thoughts do you have on handing it down to the next generation? Share your thoughts with us and see what others have to say on our Facebook page or in our LinkedIn group.