We all are familiar with family businesses that have been in our community for decades, whether it’s a mom-and-pop shop or a large corporation. But when those businesses close their doors after decades, it can affect family members in many ways, both emotionally and financially.
If you’re involved with one of those businesses, your family must now identify with something other than the business.
“An important part of a successful transition is making sure your family has replaced the business purpose with a family purpose,” said David Foster, a senior resident for the PNC Center for Financial Insight®. “To avoid conflict, you should transition the same business values to your own family life.”
Here are four common principles you can use in your transition to life after the sale.
Successful businesses have a clear company purpose and vision – so should your family.
“We encourage you to create a family mission statement based on shared values to serve as the ‘family constitution,’” said Foster. “The mission statement can be used as a guide to help the family identify needs and wants for entrepreneurial, philanthropic or familial purposes.”
A successful family mission statement has four key features:
A family mission statement can provide clarity when a family is faced with important decisions.
Generally, successful family business owners love what they do, and the passion can be infectious, driving momentum to create success.
Following a sale, momentum may suddenly stop, but you should try to rediscover your passion, showing the same strong perseverance and around-the-clock commitment you did with your business.
“An effective switch to life after the family business requires new commitments to equally exciting goals that will help you and your family continue to make a significant difference in the lives of others and continue your financial legacy,” said Foster.
For example get involved in philanthropic adventures that support a cause the whole family is passionate about. Helping the local, national or global community can often recreate or enhance the enthusiasm and passion that drove your previous success.
You’re already trained in this level of commitment and belief in values and family objectives, which should give you an edge in finding these new goals.
When you owned your business, control and integrity were most likely core values in your business model. Your integrity meant you stayed true to these values throughout different generations of ownership. This allowed you to grow as a business and build trust and loyalty with your customers.
With financial security often assured after selling the business, you face a new, broader sense of family and mission, but you should use the same integrity and control to keep this financial legacy and maintain trust and loyalty within the family.
If you’re a senior leader, you should be willing to pass on control, or as part of the younger generation, you must be willing to learn. To do this, have family meetings to provide education and establish governance structures to sustain family values and philosophy. Make sure to communicate expectations so everyone is on the same page.
As a business owner, you may have made prompt and bold decisions because you knew the potential results. However, after a sale, your family may hesitate in making financial decisions without a clear understanding of the impact.
After selling your business, create and implement a decision-making model to assist. As future generations grow up, this model can help mentor the younger generation and teach them the business skills that brought success to your family in the first place.
Transitioning away from the business may be challenging for your family. The entrepreneurial spirit, passion, creativity, big dreams and willingness to take risks may be replaced by feelings of apathy or a lack of purpose.
“To guard against these feelings, you should treat this transition as a time of reflection and planning and use that positive energy, commitment and creativity to create a new purpose,” said Foster.
That purpose needs to be channeled to benefit the next generations.
While you should always contact your financial advisor, new focus could include mentoring the next generation of family leaders. Helping those emerging leaders gives everyone a chance to make a successful transition to life after the family business.
Learn more about business succession planning »
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