Comfort with each other can sometimes lead us to replace communication with presumptions. For example, a husband may conclude that there is no reason to ask his wife a certain question “because I have known her for years, and I know how she would answer such a question.”
Obviously, too little communication can demolish personal relationships. The damage can be similarly devastating when it comes to family businesses. Our region’s incredible work ethic and values that so deeply embrace faith and family leads us to have many family businesses such as farms, retail operations and home-based ventures.
I regularly work with small businesses, which are often family businesses, to deal with their business, real estate and estate planning needs. In that context, the thought of succession of ownership or management of the business often arises.
However, because a family, by its nature, has been with each other for a long time, the traditional methods of communication can be discounted, as explained through the husband-wife example identified above.
Parents “think” they know what their offspring will want to take over, manage or own. However, parents seldom have in-depth conversations with their kids or grandkids about those topics.
Similarly, members of junior generations tend to make presumptions about what the senior generation wants. Kids and grandkids often have created vivid ideas of life outcomes based upon hints and ideas gleamed from off-hand conversations made by parents over several years.
And, parents can do the same when it comes to their kids and grandkids. However, a single misinterpretation of one off-hand comment 10 years ago can lead to wildly off-base conclusions of what the speaker of that off-hand comment truly wishes or desires now or in the future.
In reality, what is in the mind of someone else is often one of life’s biggest mysteries. Before I help businesses even begin to think business structures, ownership transfers and tax avoidance, I insist that deliberate conversations take place among all of the stakeholders. For family businesses, the stakeholders are the senior generation, junior generation or generations, in-laws and non-business family members. All stakeholders may not have equal input, but considering the “actually identified” feelings of everyone makes ultimate business plan and its implementation much more successful.
Depending upon the family and the business, many families can lead the conversations themselves, but years or decades of old habits can die hard. Therefore, I am sometimes asked to facilitate the conversations, and sometimes those conversations initially take place separately among different groups or individuals.
For many families and businesses, the “communicating” can takes months or even years before the formal, legal structures are locked down. During the time of communication, the stakeholders can begin to visualize the options and engage in open-thinking about how to create innovative ways for a family business to thrive through unique combinations of innovation and preservation.
We lawyers can identify tools to create and implement business plans, but without clear communication in advance, such plans are unlikely to lead to the success of which all stakeholders privately dreamed.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.