The Dos and Don’ts of Multi-Generational Business Planning

Family businesses frequently face challenges in juggling the preservation of the family dynamics, the business’s need for capital and the desires of the younger family members. Multi-generational business planning is a layered and intricate skill and brings into focus the need to save for retirement and college, maintain household budgets, manage employee needs and plan for the future.

This constant balance of family business and legacy objectives can be achieved by first asserting the multi-generational family values and aims of the family and the different employees within the firm.

Parts of planning involve developing new ideas, managing expectations, getting customer feedback, developing new technologies and creating innovative strategies that impact the goals for the business succession planning.

Defining multi-generational business planning

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Our connections to our parents and future generations unite family-owned businesses. As their parents did for them and as you do for your extended family and family shareholders, your parents put a lot of effort into preparing you for success.

Continued business success can be achieved through multi-generational wealth planning, great decision-making, new tactics and innovative office technology. TimeTrack Duty Roster, for example, automates the entire shift planning process, saving you a lot of time and frustration!

Brainstorming and planning for future generations is a cornerstone of multi-generational business planning.

A comprehensive multi-generational plan will guarantee that your kids and other board members reap the full rewards of your life’s labor so they can do the same for their kids. This strategy and succession planning may involve the following:

• Giving younger relatives money gifts
• Transferring assets
• Transferring the family business market share and succession plans for the best interests

Implementing a multi-generational financial strategy amongst family business owners is beneficial at any stage of maturity.

 

 

Pros and cons of multi-generational businesses

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Let’s examine the benefits and drawbacks of family office ownership.

Pros

Consistency

The operational status and skillset of each family member typically determines who leads the family business. As a result, leadership tends to last for a future generation, ensuring smoother transitions and stability. In many family-owned businesses, the leadership roles, owners and employees will remain in place for many years before changing, usually due to a life event like illness, retirement or death.

Cost reduction

Family business owners are ready to make financial contributions to support the operation. This can entail taking a brief pay cut or investing personal money into the business. Long-term company success is essential to the family’s financial existence since it gives them greater flexibility regarding their finances.

Long-term prospects

Non-family businesses usually create their quarterly goals. On the other hand, family businesses plan for years or even decades. This bodes well for current and future employees and the company’s mission statement and future goals.

Cons

Conflict between relatives

Any family-run company may experience conflict due to tough decisions and personal dynamics. Additionally, it is frequently difficult to address such problems due to family ties and job descriptions.

Lack of coordination

Family businesses rely heavily on trust, but this might not always be the ideal approach for the business environment. Nevertheless, it is still crucial to take regulations seriously via succession plans, including internal regulations and business law.

Favoritism

Senior-level incompetence can significantly impact a company’s performance and personnel retention. Family members may be elevated to high managerial positions in some family firms without merit which can quickly derail a company’s goals and success.

Planning your multi-generational business

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Develop a sound business strategy and seek the advice of reputable legal and tax service advisors before starting any venture.

To ensure that the venture’s activities and objectives are transparent, everything must be in writing and distributed to all stakeholders. The following items are possible inclusions in the family business plan.

• Define roles

As a family business is being launched, several family members may have different opinions about running it. Find out who will play each part and what that part entails. To avoid confusion, specify who reports to whom.

• Compensation

Determine the payment details for remuneration, such as a salary, hourly rate, profit-sharing arrangement. Ensure that every worker knows how compensation is calculated and any applicable state wage requirements, whether family or not.

• Owning interests

Before beginning, specify the ownership stakes. For example, are members of the family paid for their work? Do they receive a share of the company when it is sold or at a later date? What are the family members’ voting rights on the direction of the business?

• Exit strategy

What is the family’s strategy for leaving? Come up with an exit strategy at each level of the company and ensure that everyone is happy with the terms. Without knowing this upfront, a family member might believe they contributed significantly to the company’s success and are therefore entitled to a specific payout. If the person does hold a formal share in the company, you’ll need a method for determining the value of that stake and the terms of any exit compensation.

• Succession plan

The company’s founders may want to retire or hand the company over at a certain point. Who will lead the company then? How will the company will be valued (if necessary)? Determine these conditions upfront before the business is launched. This strategy could need to be modified after the company is established, but for now, it establishes a standard. A plan in place might decrease resentment or prevent future arguments.

Multi-generational business planning tips

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The following are essential tactics and tips for developing a workplace culture that will support your family company’s success for many years.

Great communication

Open dialogue is the first step to combining the contributions of the older and younger generations in a way that is advantageous for everyone, including the business. Expectations, beliefs and traditions that influence judgments and opinions frequently give rise to misunderstandings which result in conflicting directions.

If these subjects are not discussed and understood, family members may use different strategies for cooperating to achieve the same objectives. The younger generation must understand the significance and meaning behind actions taken and the reasons behind processes and decisions.

For the older generation to exhibit interest and involvement in the younger generation, they must be receptive to hearing new ideas and viewpoints.

Multi-generational business values

What does the company stand for? What are its core values and morals? These are important factors to consider as they contribute to the company culture. Customers will choose your company because it is founded on certain ideals and future generations will know that business decisions and priorities must adhere to those standards.

Staff skillset

If succession planning doesn’t prioritize critical task analysis based on knowledge, experience and commitment, the company will suffer. Family members should undergo the same training as other employees if a family wishes to maintain the business within the family.

The most prosperous firms give the next generation the chance to advance into management and beyond. This fosters trust amongst all team members and aids family members in understanding and appreciating the various facets of the organization.

Conclusion

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Family-owned and managed businesses require a careful balancing act between risks and benefits. So think it through before you take the plunge if you intend to launch a business with family members, including your spouse, parents, siblings or kids. Although you can’t just assume that a family-owned business will succeed, there are still some chances because every family is unique. There are issues you may or may not be able to resolve, just like in any family. To be safe, survey the area’s mental and physical geography to get a better idea of what to anticipate.

Don’t forget to leverage modern technology to ensure your business has the best chances of succeeding. TimeTrack offers a range of time tracking and scheduling automated features that will help take your business far into the future.

In addition to TimeTrack Duty Roster mentioned earlier in this article, consider TimeTrack Appointment Planning. The flexible calendar overview gives you and the team easy management over too many meetings and sessions. Simple, quick and automated planning and time management all at once.