Wealth Planning Issues Even Successful Family Businesses Battle
There are many different issues business owners encounter on a seemingly daily basis. Some of these issues have greater consequences than others. Problems that affect financial planning CAN be a small setback or a big deal. And issues in wealth planning for family businesses can impact many people.
I want to discuss common issues that even successful family businesses battle. You may not be doing any of these things, but I want to bring them to light so you can be aware of possible issues and see if any of them resonate, which might warrant taking a closer look.
Issue #1: Over-focusing on a single issue rather than reviewing the entire situation
As a business owner, I understand how difficult it can be to run a business. There are instances where you feel like you are wearing 20 different hats. In our practice, we have experienced circumstances where some business owners decide to focus on a singular issue as their primary focus at the expense of other major objectives. Whatever the issue, it can’t be the primary focus to the exclusion of other major objectives. Focusing on the family agenda is the primary goal. The key is to maintain harmony while focusing on multiple objectives to address the bigger picture. While some issues may be more immediate, you must keep the primary goal of the family in mind and then work to make this goal a reality.
Issue #2: Secrecy of financial details
Many families don’t like to talk about their wealth planning with family members. This secrecy can be quite a shock if the heirs don’t understand the plan until the will is read. There are many reasons people aren’t as open with their financials. Sometimes people naively think it’s too far down the line and the next generation doesn’t need those details now. But secrecy or the lack of open communication about business financials may be counterintuitive. Honest, open communication is usually the best policy to keep all interested parties appraised and even helpful to have them cheerlead the organization’s success. And sometimes it’s not so much all the little details that need to be shared, but at least the major decisions which could impact the next generation.
Issue #3: Not Staying Up to Date
Wealth planning requires accuracy. Not being up to date is out of date. Your business ebbs and flows. These changes need to be reflected in your wealth planning. It’s better to address changes sooner than later, as adjustments can help you stay on track to pursue your goals. You should review your plan periodically to make sure that the plan is meeting your current needs.
Issue #4: Lack of communication about selling the business
For many families, continuing the family business into the next generation is of the utmost importance, and selling it would be unthinkable, or even worse, a disgrace. But if heirs don’t want to own or continue operating the family business, it can be a better decision to sell. For someone to feel they have an obligation to continue something when their heart isn’t in it won’t provide the enthusiasm or vision the business needs to prosper. Your business is not a failure if you elect to sell it. In fact, given the right scenarios, it could be the best route for all involved.
Issue #5: Not working with a reliable team of professionals
Hiring the right professionals can be some of the most important relationships for your family business. You want a group of professionals with a stellar reputation, full operational transparency, and with a fiduciary mindset who has your best interests at heart. You should evaluate these relationships as something more than just numbers. Your group of professionals may not become “just like part of the family,” but the human connection is important. The greater the connection you have, the more you and your family will be able to open up and share your dreams and goals so you can move toward them.
One individual typically does not have the ability to be an expert in all aspects of wealth management. Instead, the financially successful build a team of, at minimum, a wealth manager, CPA, and estate attorney who all work in tandem to protect the family. It is important to have one professional, traditionally the wealth manager, coordinate with the family and other professionals.
As you can see, connection, focus, communication, accuracy, and constantly evaluating what’s best for the business as a whole are important issues to consider. And having a trusted group of professionals can help you see the bigger picture and avoid some pitfalls.
Our mission at Zeches Wealth Management is to use our financial planning and tax expertise to help multi-generational families and business owners. If you have any specific questions about your family’s situation, feel free to contact us, and we will do what we can to help.
Issue #5: Not working with a reliable team of professionals
Hiring the right professionals can be some of the most important relationships for your family business. You want a group of professionals with a stellar reputation, full operational transparency, and with a fiduciary mindset who has your best interests at heart. You should evaluate these relationships as something more than just numbers. Your group of professionals may not become “just like part of the family,” but the human connection is important. The greater the connection you have, the more you and your family will be able to open up and share your dreams and goals so you can move toward them.
One individual typically does not have the ability to be an expert in all aspects of wealth management. Instead, the financially successful build a team of, at minimum, a wealth manager, CPA, and estate attorney who all work in tandem to protect the family. It is important to have one professional, traditionally the wealth manager, coordinate with the family and other professionals.
As you can see, connection, focus, communication, accuracy, and constantly evaluating what’s best for the business as a whole are important issues to consider. And having a trusted group of professionals can help you see the bigger picture and avoid some pitfalls.
Our mission at Zeches Wealth Management is to use our financial planning and tax expertise to help multi-generational families and business owners. If you have any specific questions about your family’s situation, feel free to contact us, and we will do what we can to help.
Have A Question?
If you have questions that are specific to your family’s situation, feel free to contact us and we will do what we can to help.