No Substitute for Good Communication

“The single biggest problem in communication is the illusion that it has taken place.”-    George Bernard ShawOne barrier to the successful transition of a farm or other family business to the next generation is a lack of clear communication.  I recently met with a business owner who wanted to start a “succession plan” without ever speaking to his son about his desire to work on the farm.  His son does not work on the farm presently and the father had no idea if he wanted to come back.  For this farmer, it was his dream to take over the family farm and he just could not imagine his son would not want the same.  It remains to be seen what the son wants to do.  In other situations, while it is known that the child wants to take over the business and is told about the plan, no input was obtained from the child in developing the plan.  Worst of all, it is common for the plan to be kept “top secret” with the child only being told: “Don’t worry; we have taken care of it.”In transferring the family business to the next generation there is no substitute for good communication.  The lack of communication will derail even the best plans.  I suggest the following approach:1. Have an initial private meeting with the child, away from the family home and other siblings, to discuss his or her interest in participating in and ultimately taking over the family business.  Put them at ease by telling them you are not asking for a firm commitment at this point, just exploring his or her interest, but don’t be afraid to ask the question directly and discuss the pros and cons.2. Once you know the child is interested, meet with your exit planning advisory team to discuss possible exit strategy options.3. In subsequent meetings with the exit planning advisory team invite the child (and possibly other family members when appropriate) to participate in the planning process and seriously consider their input.There is no doubt that open communication about ownership succession is difficult, but the rewards are worth the effort.If you are interested in learning more about business succession planning I will be speaking at the Logan Small Business Development Business Valuation and Succession Planning Workshop in Logan, Utah on August 29.  You can register here.