Our nation was built on the back of successful small family business. Our national economy still rests on the small to mid-size privately held firm involved in providing products or service to clients. The majority of firms in the professional remodeling field are made up of family members who build a reputation and grow with referrals.
Why do so many of these remodeling firms fail to make it to the next generation? Studies show only 34 percent of these family businesses will make it to the second generation. Far fewer will get to the third or fourth. Here are a few reminders to make your family remodeling business stay and remain strong:
- Resolve conflict between generations. The first generation doesn't want to talk about the future. The second wants to know where they stand. You need to understand that everyone has emotional issues to get off their chest — the "elephant in the other room." We all have gray issues, some worse than others. You may peek in the other room and see the whole issue, or even worse, just the trunk of a large pachyderm on someone's mind. The sooner you visit the elephant in the other room, the better off you will find yourself.
- Prepare future generations for leadership. The second and succeeding generations need to learn how to lead and build trust with the rest of the family. There are clear goals for everyone (not just non-family members) that will be followed. Job descriptions are important so everyone knows the expectations. Everyone will be accountable and have clarity on where they stand.
Even if you resolve all the issues the family may have, you still need good leadership.
- Define the family employment policy. A written employment policy is very important to govern the current and future rules for joining the family business. These are best if they are written out and also explained at a family council meeting in person. Set aside time for anyone who is interested to attend and answer questions from spouses, children and any others interested in joining the business full time or for summer help. It can handle questions on company trucks, educational requirements and if family members should supervise other family members.
- Understand the succession plan. You need to have plenty of time and some professional help to make the succession plan work. Many families spend 10 years on this plan, so make sure you get started early. Accurate valuation of the business and cross-purchase agreements in the event of an untimely death are a great place to start. You may also need financing arrangements and advice to pay the first generation for the stock it owns. A financial planner will assist with stock gifting questions all generations will have. Surround yourself with a good accountant, lawyer and financial professionals to help you answer questions.
Those families who visit the tough issues will provide a wonderful service to the next generation and foster a successful place to succeed.