Psychologists tell us that over 85% of the people on planet earth come from dysfunctional families – families in which there is abuse, anger, depression, addictions and/or just plain bickering and disappointment. Most people have a problem with at least one member of their family.

As we all know, weddings and funerals bring out the best and the worst in people. Normal, balanced adults can do the most unexpected and bizarre things in moments of chaos, change and stress.

Then add the business element – money, assets and power – to this volatile mix and you’re planting the seeds of trouble. It’s all very well agreeing, on a fine day with a following wind, that when Dad retires from his company you and your sister will take half share each, you’ll be in charge of marketing, she’ll look after production and it will be all sweetness, light and lots of money. However, you both know that, when the time comes, neither of you know how the other will react. You don’t even know how you’ll react!

Then, suddenly, Dad has a stroke or manifests a 20-year-old blonde to shack up with on a paradise island and the business is suddenly yours and he’s not there to manage and mediate. There’s just you and your sister and, after an uneasy silence, all hell breaks loose! There’s bickering, lawsuits, huge legal costs and no money left to run the business and a sister you’ll never speak to again … and employees now without jobs, suppliers without a large customer and the mayhem spreads through the whole community.

All this can be avoided.

A Business Succession Plan

Take some simple steps, think ahead and try to imagine the perfect scenario after the reins of power have been passed on. Whether you’re the one in charge, about to step down, or you’re one who will be stepping up to the top job, you’ll all benefit from creating a Business Succession Plan.

It’s a very simple document, for example:

At the time of Harvey Smith’s death, medically assessed incapacity to run the company, or decision to step down from being CEO of Smith Ltd., this will happen:

1. Justin Smith will take 40% of Harvey Smith’s shares and will assume the role of CEO,
2. Doreen Smith will take 30% of Harvey Smith’s shares and will assume the role of Marketing Director,
3. Nadine Smith will take 30% of Harvey Smith’s shares and will assume the role of Finance Director.

The above shares will be valued at $4.00 per share and the share price will be paid to Harvey Smith within a period of three months.

Of course, you will then get lawyers involved as they know all the bad things that can happen (or have to be covered for) that us mere mortals can’t think of. The lawyers will create many more words (and big words) and clauses. However, until you arrive at your lawyer’s office, write down something similar to the above, all sign it, date it, get an independent witness to sign it (to attest that you were all actually there and signed voluntarily) and do a copy for everyone who signed.

Then if the unfortunate, unexpected happens before your lawyers final deed is created and signed (yes, lawyers can take a little time to do these things!) this family-created document should be viewed by the courts as a valid legal document.

Also, if you create this shortened version now, you’ve got a good draft to make your lawyer’s job easier. Do it now – have a nice dinner together and then sit down and create a Business Succession Plan. If you don’t, you know what will happen – bickering, law-suits, frayed family relationships, broken business, jobless employees and on and on the misery will go.

So, what are you waiting for? Do it now and then make an appointment with your lawyer, have a happy family and a thriving business for the long-term.

Stay tuned to find out more about what to include in your plan.

Philip Bradbury CA