A family business does not need a lower Manhattan address but it frequently has to make some complicated decisions as to what comes first, business or family. One consultant, after working with contractual family transactions explains the common pitfalls ranch families make and how to translate these into success.
Since most ranching businesses live by ‘family first’ philosophies, there may not be a will or specifications on how the business operates. If the priority is to build an empire and lasting legacy, advisors stress putting some more casual family attitudes aside and focusing on the business at hand.
Behavior that is typically regarded as detrimental to the family business should be dealt with as any other non-family-based endeavor. A worker should not be entitled to a job in spite of poor work ethic, emotional instability, or addictions.
Experts advise that the operational plan of the family business should establish clear and evolving roles based on sound judgment, trust and training.
Senior members must be comfortable in their financial security as well as ensure the business will grow as a family operation. At the time of retirement, most advisors say about half the income should come from outside the business. Otherwise, micro management could become your scourge, especially if they are not meeting with your approval. Your business figures significantly in your retirement so financial precautions should be taken.
Youth can bring tremendous life to a family operation and senior members appreciate and utilize that energy through the cycle from labor to leadership, but this must preclude arrogance. Avoid pitfalls and plan an exit strategy, how this is to be carried out, who has the option to buy, how the business will be appraised along with a precise payout plan.
Transition of assets is critical and a process that takes time. Parents bequeathing a business to children should have conditional contingencies. Estate plans must include clear parameters for business ownership and transfer of management as well as when to buy and sell. The next in line should be privy to all your final wishes including documents, your final resting place, account access and what’s in your will.
Personal relationships make business a challenge, whether it’s on the ranch or in the family corner office. Honoring your heirs by honoring your business is a cycle through which the legacy is passed and production continues.
Source:Beef Magazine, “Is Your Ranching Operation Business First Or Family First?” Heather Hamilton-Maude, Dec. 30, 2013