shop talk section

A family affair
THREE STEPS TO KEEPING YOUR BUSINESS IN THE FAMILY AND ENSURING YOUR LEGACY CONTINUES
A family affair
Family businesses have always driven innovation and employment across Canada. Yet, many owners admit they have no formal plans to manage business dynamics and intergenerational wealth, and to prepare future generations for their retirement.
“Entrepreneurs are really good at building wealth, but you’ve [also] got to work at passing it along,” says Grant Robinson, national director of the BDO SuccessCare program, which specializes in transition planning. Ensuring a smooth transition means employing strategies to make sure that all parties understand what happens next.
Bring the next generation up to speed. Emotions run higher than usual in family businesses simply because everyone knows each other as family members. This is the case especially if the next generation lacks experience, key knowledge or a shared passion for the business. Avoid future conflict by identifying successors early and taking steps to support their learning curve. “[Current owners need] to set up governance while they are still active in the company and healthy, so that the next generation can learn how to be business partners and make business decisions,” says Robinson.
Form clear communication channels. A lack of communication leads to incorrect assumptions about the business. “Silence can be a killer in this whole thing,” says Robinson, “but if [communication] is strong, then there’s good evidence that [family members] can be owners together.” And if your business meetings occur around the dinner table, it may be time to move them to a boardroom.
Adopt a formal succession plan. Building a transition plan that’s aligned with everyone’s needs means retaining a professional financial advisor who can help you adopt a collective vision, determine continued family involvement, refine strategic priorities and establish personal retirement goals and cash flow needs.
“It takes three to five years to get your business ready for sale,” says Robinson. But putting time and effort into planning for an inside sale early enough is win-win: even if you don’t end up selling internally, you’ve done the legwork to sell externally. “If it’s ready for an inside sale,” he says, “it’s more valuable to an outsider.”