Strategies FAMILY BUSINESS
Expiration date Plan ahead for the end of your business Part 2 of a series
WHEN WE START A BUSINESS, which eventually becomes a family business, few of us think of the end of the business. Heck, most of the time we are thrilled to get over the hurdles of opening the business, making that first dollar, paying that first payroll and then even paying that first tax bill. After all, paying taxes is a sign of profit and we all want that. I have written in the past about starting at the end, and in the weeks and months surrounding this series of articles this notion has been drilled into me like never before. My mother has stage 4 metastatic melanoma. The end is in sight. As my father so profoundly put it, we have an expiration date. In an attempt at catharsis and to help so many of you out there in business who deal with such devastating news, I am chronicling the parallel between the family business and the loss of family. What would we like the final expiration date to be? In a capitalist economy, we need to be comfortable with the notion that “death comes for us all, even for kings he comes,” in the immortal words of Sir Thomas More. The death of a business allows the capitalistic cycle to continue as the consumers choose what they want in an unfettered way. Some businesses will succeed and last generations, and others will wither on the vine and die. When the automobile came into being, we had to let a number of businesses die, from buggy-whip makers to
blacksmiths. Some carriage-makers adapted and made car bodies, and others went out of business entirely. Free enterprise by necessity allows for the growth and ultimately death of the company and industry. To prop up an industry that is unnecessary simply for the salvation of jobs is contrary to how free enterprise works. But if we are truthful with ourselves, there is a part of us that is upset seeing businesses go out of business and especially if it is our own. The tendency is to try to save it, to support it or even resurrect it if we can. There is an innate Messiah Complex in all of us in business and this manifests itself most strongly at the end of the business cycle. Remember the Management 101 class you took where you learned the stages of the business lifecycle? After the decline of the business a decision is made to rebirth the firm or let it pass. This is where I advise business owners to start: at the end. Think about what you want the end of the firm to be. We all want our companies to stay in business for centuries, especially if it is a family business. We want the quaint notion that the grandchildren can reap the rewards of a successful business founded by the iconic leader with the picture painted on the boardroom wall. That myth is larger than fact, but nobody is left to dispute the facts, so the legend lives on. So, Mr. and Mrs. Business Owner, what do you want the end to be? Do you want your name to live on long after the family is out of the company? Do you want the doors to shutter after reaping the rewards for generations to follow? And if so, how long is long enough? These are tough questions, but the facts are that none of us is immortal, nor are our businesses. “This world has only one sweet moment set aside for us” are words taken from Queen’s song “Who Wants to Live Forever.” My father is right – we all have an expiration date … for people and the businesses we love. So why not plan how we want the end to go? There is the business owner who died unexpectedly leaving his heirs to fight for years with the other owners – all family members – litigating the future of the family business in court. Then there is the father owner who walked out of the business one day and told the kids – all adults – he
wasn’t coming back tomorrow or ever. These are not good outcomes. These conclusions lead to chaos for the survivors left to pick up the mantle of the family enterprise in ashes. So, plan now for the end. It isn’t an easy conversation, this expiration date, but it is a necessary one – perhaps the most important one ever! n
DAVID BORST David Borst, Ed.D., is executive director and chief operating officer of Family Business Leadership Partners, a regional resource hub for family business. He can be reached at david.borst@cuw.edu. biztimes.com / 33
