As Family CFO, you can imagine how often we are asked about the risks and benefits of involving family members in business decisions and planning. There are many positives to including family in the business, but there are several things to think about before making the move.
Like most business owners, you have probably watched your business expand into many moving parts, creating more complexity than originally expected. As such, you may have moved from a position of total control, to a position of delegation and oversight. As your role within the company continues to shift, it might be time to start thinking about including your family.
Before you ask the entire family to get involved, it’s important to take a step back and think about each individual. What are their strengths? What are their weaknesses? Are they qualified to successfully run a business? After careful consideration, it’s time to set up the meeting. Agenda items could include:
- Which family members will be active in the business?
- Who will be the decision makers?
- What role will each member play within the company? What role does each person want to play?
- How will each person be compensated? What benefits can be provided?
- What expertise does each person bring to the table?
- Will inactive family members receive any kind of compensation?
After you’ve answered these questions, planning can begin. A good starting point would be to define your eventual successor(s). Be sure to include some key considerations into your plan such as: your own age, your health, expected growth of your business and the abilities and interests of your successor(s).
As ownership interests are dispersed to family members, you will run into various complexities such as income, estate, and gift taxes. We strongly recommend talking to a team of professionals to coordinate your business’ financial, tax, and legal strategies.
If including family members in your business, exploring a business sale, or transitioning business to employees or family are strategies you’d like to explore, contact us today. Our Team would be happy to talk through the many considerations with you so you and your business are set up for success for years to come!