What To Do When Taking Over the Family Business
Taking over the family business and making it your own all while building on its blueprint for success to scale it into the future is at best challenging.
The idea of the family business is that you are all in it together. No one is just there for the paycheck. You all want the company to become big and succeed. You have a vested interest that goes beyond your wage or day-to-day hours.
Considering the United States has over 5.5 million family businesses alone, it is relatively safe to say that, as a business model, the family business is a pretty strategic one.
Not only do they contribute a massive 57% of the GDP, but they also hire just under 100 million people.
They are great for the economy, great for communities, and great for families.
Every company, however, has an era. Perhaps the head of your family and the head of your company wants to retire. Passing it on in advance means that they can train you up and help ease you into the position so that everyone involved can get used to the change and you can be a strong leader right from the start.
Whether the family business was willed to you, or you were brought on in advance, you will want to follow this guide to succeed your predecessor successfully and reinvent your company for continued success.
If Company Was Passed On To You
The best way for a company to be passed on is while your loved one is still alive. This way the legal issues can be hammered out, you know the business, the business knows you, and more importantly, you understand the company.
Understand the Company First
Even if you have all the best ideas in the world, you need first to understand the company and where it is.
People are adverse to change, and if you come in changing everything left, right, and center, you will find resistance every step of the way. Not only that, but making changes without understanding the company’s needs first is a huge waste of time and money. By learning the company inside and out, you can know what changes are needed by priority, and make changes that actually benefit the company.
Make Changes that Respect the Company and Its Employees
Longstanding employees are valuable to you. If their knowledge and skills have fallen behind, sponsor them to continue their education. This doesn’t even have to mean going back to college. Online courses, workshops, and even industry events can help them learn new skills that will make their work more valuable than before. You want to create a healthy, thriving company culture, and to do that you need to respect the company you have inherited and those working for you. Only start making changes to the staff after you have carefully evaluated everyone.
Auditing is a great way to unearth all of the hidden skeletons and get them sorted, either by the law or through a loophole. Times change and laws change, and what might have been acceptable thirty years ago won’t be so today. You will want to know everything, so you don’t one day get blind-sided.
Update It For the Future
If it doesn’t have these changes already, you will want to implement some changes:
- Get it on the Cloud
- Input all data into programs
- Make it efficient
- Reduce costs
- Pass on the benefits
If Company Was Left to You In a Will
If the company was left to you after your loved one died, the process might be slightly different. The company, for example, can only be left to you entirely if your loved one was the sole trader. Otherwise, you have partners and even investors to contend with. There are a lot of legal issues to deal with without the added risk of the final update to your loved one’s will being fraudulent.
Successful businesses attract all sorts of people, including those that aren’t adverse to creating a false will or using your loved one’s deteriorating health to con the previous business owner into giving them the company. Even if you don’t feel the executor was a good choice, you will need legal representation. In this case, you will want to hire specialists to challenge executor of will, challenge a will itself, or anything in-between.
Fight for Your Rights
If there are partners or shareholders, there is likely an agreement at hand that will either make your ascension as owner easy, or incredibly difficult. You will want to fight for your rights so that your inheritance is protected and your family member’s will is respected.
Deal with Debts
Companies can be in debt just as much as a person, and dealing with those debts first is often the only way you can create the right strategy moving forward.
Take it On as CEO and Owner
Once you have dealt with the debts (or, at the very least, sorted through them and have created a healthy repayment plan), you can then either take it on in a managerial role, as the owner who hires managers or absolve the company. In the first two examples, you keep the company, at which point you are responsible for its success and legally.
OR: Absolve the Company
Sometimes companies simply can’t work.
Sometimes the best way forward is to absolve the company so that you stop paying taxes and can finally wipe the slate clean. Not every company succeeds. In fact, it is more likely that a company will fail. Don’t feel like you are tarnishing your family member’s memory by absolving the company and shutting it down when the alternative is to dig yourself deeper into debt.
Taking over a company is challenging. You want to keep what works and finally put in the changes and strategies you believe will help you stay in business in the future. This applies whether you were guided through the transition process or not.
Your family, your employees, and your community are counting on you. Don’t let yourself down and do what is best for your family and business.