When you’re dead, you’re dead.
What happens to your business, however is another story… if you planned the leadership and ownership transition, I congratulate you! In your memorial service, you will be remembered fondly!
Wait a minute! No plan? That can be chaotic for your family, children, employees, partners and the business itself — a completely avoidable mess. Don’t expect to be remembered fondly!
It is not only scary but too daunting to think of a likely scenario where the founder or patriarch dies without planning the future of the enterprise. In my recent family business coaching engagement in the US and Canada last month, the death of a patriarch was just too much to bear for family members who were caught unprepared.
During our first session, I was peppered with so many questions coming from practically all family members and creditors!
- What would happen to the business?
- What would happen to the ongoing projects?
- Who will take care of the family members?
- How would this affect our respective families?
- Will there be conflicting priorities and future plans for the business between other shareholders and the deceased’s family?
- How do we make decisions amongst us siblings?
- What will happen to Mom with Dad gone?
- How much is the total value of our business?
- Do we need to sell some properties to pay for Dad’s estate taxes?
- As heirs, how do we go about getting our inheritance?
- How much and how do we settle our total liabilities?
- Where will we get the money to pay creditors? Are our loans secured?
- Where are the list of assets? Who is in charge of safe keeping the Titles?
- Who will assume the leadership role?
- Will suppliers and creditors extend the same credit and terms of business they always have or will they begin to pull back?
- Will customers maintain their confidence in our products and services?
- Will key personnel suddenly begin to leave?
It is difficult to imagine, especially after working so hard and then all of these questions are raised because you never planned your death or disability. In unfortunate events like this, businesses are liable to fall apart if the proper planning and agreements are not in place.
Sadly, you are not alone though. In a Wong + Bernstein Advisory internal research, fewer than 30% of business owners have a succession plan in Asia!
You can prevent losing all that you worked so hard with a good and enforceable plan.
The key is preparation! Founders, second generation leaders, patriarchs or matriarchs always think of themselves as superheroes and take the inevitability of death lightly until one day he or she discovers something that will forever change his or her perspective about life and living.
And then in a blink of an eye, the mortal faces death and reflects on the family and the family business and the “what ifs” and the ” what should have been done”.
But in all likelihood, it will be too late.
Thus, it is no surprise that the Chinese saying, “Wealth Shall Not Last Three Generations” will continue to consume and haunt families in the event that death suddenly occurs in the family.
Any death can disrupt a functioning family and can mercilessly cause the family business to jolt and veer off course. At worse, the lack of preparation and the entitlement of the family members can cause the family business to fall apart and disintegrate.
How then should family businesses deal with such a powerful emotional event?