The Family Business – Planning for Success and Succession

In the United States we have a sometimes unhealthy obsession with things like competition or taxes, sometimes making bad business decisions based what we mistakenly believe are good reasons.  It should come as no surprise that our country has an enormous market for estate planning services that includes a number of interconnected niches, segments and industries spanning financial advisory, wealth management, estate planning and asset preservation, just to name a few.  Passing along assets is pretty simple, but passing along a working business is not just complex, it’s hard to do successfully.  When you’ve worked hard and long to build your business, profession and reputation, how do you “keep it in the family”?

Is Estate Planning Enough for Family Business?

Estate planning is typically driven by the understandable wish to pass along wealth to future generations and to do so equitably among sons, daughters and even others who may be part of the extended family.   Those desires can come into conflict or even take on motivations that are deeply emotional, but not always rational.   A common example is the driving preoccupation to keep family wealth out of the hands of others, sometimes from your competitors, but just as often from the taxman.

Another example arises when deciding who is best suited to carry the mantle and maintain the family business.  Grooming someone into (or moving them out of) the family business doesn’t guarantee future success, and involves hard choices that can lead to difficult expectations, bruised feelings and even estrangement.  A well-planned estate does pass wealth to future generations in the form of assets, but also comes with its share of the, burdens, liabilities and responsibilities associated with that wealth, particularly when a family business is involved.  In today’s world it’s an unfortunate reality that many sons and daughters simply don’t want to do as their fathers and mothers have done, and have the choice (for better or worse) to go their own way – to leave the family business.

Nobody wants to see their life’s work come to an end.  There are many euphemisms to describe the myriad of ways a family business can decline if not properly transferred to the next generation (“A slow death”, “Being run into the ground”, “Died on the vine”).  No matter how poetic the phrase may sound, the risk of failing to pass along a family business is an outcome people desperately seek to avoid, and fears of that possibility drive the booming industry of estate planning and business succession.

However, there is a distinction between business success and business succession that’s worth considering.  Before seeking the guidance of outside professionals or advisors, talk within the family to be sure to take account of exactly what makes your family business successful.

Success and Succession

My father was in a visible and successful business that I romanticized.  He was well-known and widely respected in our community, so much so that it was hard to go places without people recognizing him and openly expressing their admiration.  At times we’d proudly bask in the attention of our father’s celebrity, and other times we’d get a little annoyed at having to share his time and attention with seemingly countless strangers, many of whom would recognize his familiar and popular persona in the faces, features or mannerisms of his kids, even when he wasn’t with us.

Our parents provided for us materially and with a sound education.  Not just the best available education, but the kind that makes us blush when we think of how much privilege and advantage we had over so many others less fortunate. Like most people, when I decided to go to college I didn’t exactly know what I wanted to do, but I expected to achieve the success that a good education offers.  That expectation of future opportunity is the one sense of entitlement that I’m not ashamed to admit to.  I think everyone should have it.

While I hadn’t found any particular calling by the time I finished college, I was free to make my own way and chart my own path, and chose graduate school.  Around the time that I was completing my studies, I approached my father about taking up the family business.  He had always been encouraging towards anything we pursued, so I was shocked when he told me that he didn’t want me to.  I remember that moment so vividly that I still feel the mix of disappointment, frustration and even anger that welled up to contort my face with what must have been a terrible expression.

My older sister had already become a doctor.  My younger brother had the intelligence and charisma that promised his future success.  Why wasn’t all my education and hard work enough?  I just couldn’t understand what my father was telling me.  At the time I felt resentful, and I wasn’t sure if I was hurt more by the thought that I wasn’t good enough for the family business or whether he thought it wasn’t good enough for me.  Either way, that moment had bruised both my ego and my pride.

My father was smart and sensitive, and knew that this blow affected me even more deeply than my pained face showed.  He was a nurturing type, but didn’t flinch at bluntly telling me his reasoning.  He told me that he wanted more for me.  He wasn’t putting down his path, but he tried to make me understand that in his generation they never had a choice of what to become.  He felt fortunate to have built a career at all, when most people he grew up with struggled to find the most basic jobs.  I didn’t understand the rejection or his guidance at the time, but I’ve gradually grown to appreciate his wisdom in that moment and the many others we’ve shared.

Deeds and Dreams

My father was in the teaching business, and he was a total success.  Besides being a gifted and accomplished instructor, he was virile, athletic and outgoing.  He was an exceptional leader, counselor, coach, mentor and role model to many generations of people who still remember and appreciate him for things he did 50 years ago and things he did 50 days ago.  I could never be him, but I’ve always wanted to be like him.  His active and giving spirit kept him busy with several jobs outside of the business of teaching, some for pay, but many done simply out of love for others.  Despite his great optimism he’d be the first to say that he’d never imagined all that he had done and seen in his life, let alone what his children and grandchildren would experience.

Through my decades of study and work building my profession and a series of businesses, I’ve taken pride in discovering that I have at least some of his thoughtfulness, ingenuity,  talent, insight, and to a lesser extent his magic.  While that inheritance doesn’t earn a penny more for me or my family, all of it makes me a better lawyer, entrepreneur and provider.  I like to think that in my work I always deliver more than I’m paid for.  Sometimes I do a good job at giving something valuable for nothing at all.  That is vintage Pop.

My father never formed a company, but he had many partnerships.  He never cared to accumulate  capital investments or tangible assets, but he grew very rich.  He never turned a profit, but he created immeasurable wealth.

While he never had a succession plan for any of us to step into the family business, either with him or in his footsteps, he certainly had a plan for success.  I’m still learning from so many of his earlier lessons.  I know that those lessons have been multiplied many times over for the thousands of others he affected with the same wisdom and touch I’ve gotten from him every day.  That is what I find most impressive and awe-inspiring.  Maybe one day, if I’m lucky, I can find my way back into the family business.

Paul – SMBMatters Blog Team

Global Economics and SMBs – Other Macroeconomic Indicators (Part 3 of 3 Part Serieas)

3rd of 3 part series

In the first two parts of the series, we discussed Europe’s well documented woes and what many economists predict will happen with the North American growth in 2012.  Now, let’s look at other variables that could further help to shape public sentiments as well as policy making decisions in the New Year.

  • The market itself – We had unprecedented volatility in 2012 as many investors went to brink and back.  It seemed only high frequency traders made money.  And you may ask, all that drama only to have DJIA up less than 6%?  The equities market is important since it helps to formulate strategy for many corporations when it comes to keeping additional “dry powder” for rainy days or investing in the infrastructure and the future.  And that has trickle-down effects on the job market and beyond.  The good news – many predict that it can only go up in 2012.                               Image
  • Inflation and CPI – Slowing inflation means your dollar goes further.  It’s as simple as that.  While many business leaders are reluctant to give too much credence to positive, much needed trend of lower raw material costs and modest, more manageable rise in CPI vis-à-vis rise in private –sector wages, even the most outspoken inflation hawks in the economics circle claim that inflation will be in check in 2012.


  • Fed’s actions to further spur and continue the growth – dubbed QE3, two tried and true ideas are on the table.  Keep the short term rate low throughout 2012 and even into 2013 and re-start government bond purchase program to further increase liquidity in the market.
  • Growth in emerging markets – depending on how you define emerging market, overall growth will slow to below 5%, sharp decline from7%+ growth in 2010.  Nonetheless, it will still outpace the forecasted growth in the North America.

While these indicators point to incremental upside for SMBs in 2012 as far as positive business conditions are concerned, it is anything but a sure bet.  Again especially in today’s intertwined global economy, only time will tell….

Does Miserable Weather Lead to Miserable Business?


It doesn’t take a scientist to confirm that weather has an effect on many things, from people’s mood to business activity.  As this Fox Business report notes, businesses both large and small fluctuate wildly along with uncertain weather.  In that spirit, we’ve included some news on local and global weather that could be affecting small and medium businesses in the near future.

Groundhog Day! This animal determines whether or not we have six more weeks of winter or is spring is here. Some say it’s a myth, some call it a legend, and the others just say it’s an animal. I’d agree it’s just an animal, but hasn’t it always been right? The “Hollywoodgossip” site says that the groundhog is right 100% of the time. It has been said that the groundhog “Punxsutawney Phil” has seen his shadow 99 times and missed it 16 times with only 9 years missing from the records.

So six more weeks of winter there will be, dress for success or dress to impress. I’m sure you will do both, it’s a 50/50 chance to get sick or look good. This weather has been crazy enough already. Instead of the cold front flowing downward as usual, it’s pushing forward through the U.S and toward Canada.


and in other weather news…..


Cold snaps hit hard across European in the past few weeks. Forecasters have been warned that this cold will tighten its grip. Temperatures have dropped as low as minus 36.5 Fahrenheit (minus 38.1 degrees Celsius) just overnight just in the southwest. These new lows have taken over 200 lives.

There were people found dead on the streets, trapped in mountain villages and checked in hospitals for hypothermia and frostbite. The freezing temperatures are killing from Serbia to Lithuania. Rescuers were plowing through snowdrifts to get supplies, food and aid local residents. This must be really hard for the families that aren’t local and can’t be with their family during these hard times.

There have been no signs that these freezing temperatures will reach the U.S.  This cold front has somehow completely skipped the U.S. and has become a huge problem for the countries that are suffering; they didn’t even have a warning to prepare for these conditions.  Some have no power, no food, no transportation and some have no homes.

Let’s all hope for some sunnier skies, and a better climate…

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