If you're the owner of a family business and in your fifties or sixties, the pandemic for you, (health concerns aside), wasn't primarily about the great resignation. It was much more about your impending retirement and whether moving sooner rather than later makes a whole lot of sense for you and your family. There are lots of questions and not many easy answers about what actions you should be taking as your generation's custodian and caretaker of the family's principal asset. And the whole touchy topic becomes even more stressful and complicated when there are multiple generations of the family working at the firm.
But now's the time because, if you recall, it wasn't raining when Noah built the ark.
Just as technology advances and the disruptive impact of Covid-19 have accelerated significant behavioral changes in the workplace, the last two years have provided millions of legacy business owners and their kids and relatives with a window and an opportunity to take a hard look at what their own futures, business prospects, and the wide range of near term and long term outcomes look like. To say that there is a wide disparity of viewpoints on even the most basic issues is an understatement. And because these are family-centric discussions, there's plenty of history and emotion in the mix as well.
But what you might find somewhat surprising is that the discussions center around four or five major decisions almost regardless of the industry or the position of the particular business in the value chain. If you're one of the millions standing at the precipice or - at what sometimes feels more like the ramparts - and trying to hold off the surging barbarians, here's a checklist of the main questions, concerns and problems that I've seen come up regularly in these types of conversations.
I'm a lawyer, but I have intentionally avoided talking about anything legal or technical with regard to estate planning, inheritances, joint tenancies, and the like.
I'm strictly trying to share the things that you're gonna want to take into account as you move down this very prickly path. And, most importantly, the things you need to discuss, starting now, with your kids and relatives.
(1) Is Your Business a Business Any Longer or Just Keeping You Busy?
If you're still making buggy whips or pay phones or running the general store on Main Street (as the family has for decades), or if you're a local delivery service trying to compete with Amazon, FedEx, Walmart and the rest of the gig and DIY economy, it's a good time for a harsh reality check. Ask yourself if you even have anything left to sell. Ask your kids how excited they are at the prospect of taking over the business.
(2) Can You Compete Effectively Without Upgrading Your Equipment, Systems and Technology?
This isn't the time to stick your head in the sand and hope the future goes away or at least leaves you alone for a few more prosperous years. Are you running on empty? If so, it's unlikely that you've done much more over the last few years than to patch and duct tape your systems together and pray for the best. In the new digital world, where everything is changing all the time and faster than you can imagine, if you're not upgrading and enhancing your offerings in terms of speed, access, convenience and security, you can be sure that you're losing ground to the competition.
(3) Is Your Existing Workforce Aging Rapidly and What Does the Pipeline Look Like for New Talent?
In SMBs, having an experienced staff with lots of tenure used to be a real benefit. These days, as your team ages out, and it's increasingly difficult to find new talent that wants to be trained on old systems and yesterday's technology, being single-threaded with no backup in key positions is a major risk. You can't build a winning football team with a bunch of retired jockeys. Some untimely surgeries, a few illnesses, and a medical emergency or two could bring the whole business down. Are you ready to jump back in, or are your kids ready and willing to take the reins?
(4) Does It Make Sense for You and Your Family To Make Major New Capital Investments?
You've spent more years than you care to count getting the business to a positive cashflow and largely debt-free and now the world's telling you that you need to update and upgrade just about everything-; new and electrified vehicles for your fleet, new technology for the front and back offices and a major web presence, new issues around safety, cyber-security and sustainability. Do you really want to go back into the dunk tank for another decade? Do your kids want to sign those personal guarantees?
(5) Is Your Business Strategically Disadvantaged by Your Location or Geography?
William Gibson's line about the future already being here, just not evenly distributed, couldn't be more relevant to your analysis. Because even in the new digitally-distributed universe that we inhabit, where you physically live and work still has a lot to do with the kind of businesses likely to succeed there over the next decade or two. Critical masses of target populations, both customers and employees; proximity to material markets and to every kind of essential infrastructure; costs of living, transportation and real estate will all help to determine and dictate your future. Frankly, if your state is in the bottom half of all the typical literacy, lifestyle and technology lists, you need to be thinking about moving your business if you're hoping your kids will keep it going in the future.
(6) Does the Future of Your Business Depend on Parallel Investments by Third Parties or Government Entities?
In the newly-connected world, very few businesses will continue to exist or be able to economically operate independent of the infrastructure in their communities. Whether this takes the form of 5G networks, EV charging stations, or smart highways for autonomous vehicles, it's already clear that each one of these initiatives will be costly, objected to by various interests, a long time coming, and an even longer time until these new tools and infrastructure are widespread and cost-effective for all those individuals and businesses increasingly dependent on them. Collaboration among geographically proximate businesses will be essential-; even if those firms are theoretically competitors in some respects -- because no individual firm or organization will be in a position to bear the overall costs. And few states or local governments are going to be in any hurry to pick up the lion's share of these new investments. The only good news on the immediate horizon is that the D.C. infrastructure money cannon has just announced the first $5 billion for the states to start building fast charging stations along highways.
(7) Are Regulatory Changes, Permissions or Consents by Governmental Agencies Required?
Nothing's likely to get easier for businesses that require governmental approvals and--even if those concerns were not consequential in the past-- the game has completely changed. Through social media and other channels, a few whiners and social activists can make your life and your business miserable. Aggressive gentrification in previously commercial and industrial areas-- opposed by loud and angry social media campaigns and protest actions amplified by craven media-- has in some cases turned conforming and acceptable property uses into public nuisances, polluters, and other alleged risks to new neighbors' health and safety. Politicians nationwide have been cowed into submission while the woke crowd tries to rewrite the past and pull the rug out from under long-standing, fully compliant businesses. How much fight do you have left in you for this stuff?
Start planning ahead now. You don't want to be at the airport when your ship comes in.