We’re down to the last three commonsense questions that have been developed by Thomas Deans, PhD, which are all around protecting your wealth and determining a solid exit strategy for your family business.
So, just to recap, these are questions to conduct between the business owner or parent and the child or successor in the family. Ideally, if you have more than one child in the family, it would be good to conduct these questions one at a time with each child, not as a group.
If you don’t have any relatives in the business, then you can use these questions with key employees, in which case the parent questions are for the business owner and the child questions are for the key employees. There are no wrong or right answers – these questions are simply about getting greater clarity between the generations and how and when the business will be sold.
Question #10: Within 60 days of completing the business blueprint, we will complete a salary and a bonus compensation review for whichever, child or successor.
This is for the parent.
I’ve found that, particularly in family businesses, the children in the business seem to be left behind — they’re not always treated in the same way as other employees who would have a regular review process. So addressing this question makes that happen, so that children don’t miss out on the normal course of business.
Question #11: I agree to conduct an annual performance review of the child’s name. This review will measure performance against mutually agreed on and achievable goals and objectives. New goals and objectives will be set for the coming year.
This question is for the parent.
As I mentioned for the previous question, children who are in a family business tend to miss out on regular business practices, or the parents find it difficult to be able to conduct a performance review for their blood relatives.
It’s a very useful question that ensures a review actually happens and that the performance measurements are all agreed upon by the particular family member involved.
So the answer to this question is basically yes, you agree to it, or no, you don’t. But it’s also very important to have your thoughts and discussion notes recorded and there to be a contribution from the relative involved in the business.
Question 12: Within 60 days of completing this blueprint, I will present up to date job descriptions to all family members working in the business that clearly describe their duties and responsibilities. I will include an up to date organizational chart and family members working in the company will adhere to the company’s policies and procedures.
This final question is for the parent.
Once again, many family businesses tend to “go with the flow,” so this question is about instilling a process and a blueprint by which everyone will operate, rather than having family members just be let loose or not conduct themselves in the way you really want them to. This is about taking out any ambiguity and uncertainty that might be at play.
So those are the 12 questions.
Just to sum up, this is not something you will do once. You will complete this every year with the key employees or family members that are involved in your business. These questions form a blueprint that will help you tackle some of the curly issues or the elephants in the room or the areas that don’t normally get discussed in a family situation.
This is about not leaving issues to slide under the carpet; it’s about bringing them to the surface and understanding where everyone’s aspirations are, finding out if everybody is really on the same page, and thinking about what might happen in the future.
I’d like to say “thank you” to Thomas Deans for creating these 12 questions and, if you want to get a hold of his book, you can go to his website and order a copy at www.everyfamilysbusiness.com.
In the meanwhile, if you’d like a copy of the key questions from the book, you can find them here.