How Do We Keep the Family Business Profitable During our Separation and Beyond?
Family Businesses are not only the lifeline for a family; they often integrate family members from both sides who perform a wide array of valuable responsibilities keeping the business profitable. Developing a shared understanding of how the business will operate during the family’s transition to two households is essential to keep positive cash flow.
For the next steps, look at how the business operates today. Identify any urgent business needs requiring prompt decisions, its future contractual commitments, whether it should remain a viable entity and other questions such as how to reduce liabilities. Which spouse wishes to stay in the business and who else needs to be involved in making future decisions about the business? Who are the shareholders and is there a shareholder agreement? How will keeping or selling the business help or hurt the family’s future? There may be some of the key decision-makers who are unable to continue working in a family business where they held loyalties to both spouses. Should or how can they be replaced?
Essential participants need to be heard, information gathered and ideas studied. The business’s value needs to be determined and tax specialists involved in the process. This is a matter which requires professionals who can offer excellent advice and assist the family to find the best resolution.