Family businesses are a vital part of the economy in Minnesota and the nation as a whole. In fact, family businesses are responsible for as much as half the nation's gross domestic product, according to some studies. They're also responsible for about 60 percent of American jobs, and about 80 percent of new jobs being created.
However, about two-thirds of these family businesses don't survive the handoff between generations. According to one recent survey, more than half the owners of family businesses said they did not expect their business to survive once it passed to the next generation.
One reason so many of these businesses fall apart after one generation is that the next generations develop disputes among themselves. If the previous generation didn't leave explicit plans about how the succession of business leadership should go-and sometimes even when it did-one individual or one wing of the family may attempt to take control for itself.
There are ways to minimize this kind of conflict. The founding generation can leave explicit instructions and outline the roles for family members within the business. It may be possible to outline the dispute resolution process within business documents or even estate planning documents such as a will.
It's important for Minnesota business owners to plan carefully for how to pass on their businesses after they retire or pass away. And it's important for those who are embroiled in disputes over their family business to get help standing up for their interests. A family business is a great thing to pass on to heirs and beneficiaries. With appropriate planning and strong legal action when necessary, these businesses may be preserved into the third generation and beyond.
Source: Forbes, "5 steps to create a viable succession plan for your family business," Michael Evans, Aug. 28, 2013