Passing the Torch: A Story of Succession Planning and the Family Business

The following is a guest post from Megan Durham.

Everyone has certain smells that they associate with the holidays. For some it’s pine. For others it’s gingerbread. For me, it’s paint.

That’s because, for as long as I can remember, I’ve spent every winter break with a paintbrush in one hand and a bucket of white primer in the other at the family ice cream store with my brothers and cousins. There’s a lot to paint and fix in the brief two weeks that we close the store, but luckily there are a lot of us.

Between the four kids, the eight grand-kids, the new great grandchildren and all the spouses there are upwards of 20 people who swarm the small building every holiday. When I was younger my grandmother managed everything but these days she wields more plates of food than she does paintbrushes. She’s in her late 70s and starting to feel her age.

She still nominally owns the store, but about 10 years ago the family took a collective look at the situation and realized it was untenable. Sure, my grandmother had a will, but all that did was divide the value of the property equally among the beneficiaries. What if we wanted to keep it? Who would have control?

So my mother and her siblings decided it was time to meet with a professional to discuss succession planning.
It was an arduous process, mainly because their lawyers insisted that everything be put down in writing. 60 plus years of tradition, unofficial communication, and oblique decision-making processes had to be deciphered, documented and made official in a way that made legal sense.

It took several months to draft what eventually became the LLC formation documents with each sibling and my grandmother set up with an equal share of the corporation. But if anything happened to any member of the partnership, there was now a clear course of action laid out.

But that was only half the battle. They might have equal voting rights in the corporation, but that didn’t mean that all of them were equally qualified to run the business. Who was going to step up and take the reins from my grandmother? And who, if anyone, would want to run it after she passed away?

After a lot of discussion and a great deal of introspection the siblings laid out a plan. Two of them, my mother and aunt, would step up into management positions and slowly begin to take control of the business away from my grandmother. The LLC would advise and support for as long as needed, and my grandmother would still have a final say in any changes, but as long as the store remained healthy the others wouldn’t interfere.

A lot has happened since then, but while my mother stepped down in order to open her own business my aunt is still managing the store. The years between have been filled with a lot of education for everyone- it was harder for both my grandmother to let go and for the LLC to keep out of the business – but the store is healthy and everyone in the family is still speaking to each other. My aunt is thinking about buying out the rest of the partnership so that she’ll own the store outright, but that option is several years down the road.

I know that no matter what happens, whichever family member ends up with the business, my future holidays will likely be the same as my past: catching up, eating truckloads of food and roughhousing with my cousins, all between laying down coats of heavy white paint.

Megan Durham still makes a mean milkshake, although she’s now a freelance writer living in Seattle. You can read her blog at comfyninja.blogspot.com or check out her website at megandurham.com.

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7 thoughts on “Passing the Torch: A Story of Succession Planning and the Family Business

  • Can’t stress enough the importance of professionals in this situation whether the business is big or small or the family gets along or not. Professionals can suggest things like insurance policies to enable certain family members to buy the business from the other family members etc. Tedious but sooo important!

  • This is fabulous and a great way to see how this should be done. If you want to know how it shouldn’t be done, you can visit my blog, and read the article titled “the negative of wealth”. Not all business owners are able to pass the torch, or even consider it really. My father refuses to do succession planning, and has managed to run all my siblings and I out of the business individually, and has subsequently severed ties with my brother and I.
    I wish that all business owners would read articles on on it’s done properly, but it seems that many are alpha-types and refuse to see another side where they are not the only ones in charge.

  • This is fabulous and a great way to see how this should be done. If you want to know how it shouldn’t be done, you can visit my blog, and read the article titled “the negative of wealth”. Not all business owners are able to pass the torch, or even consider it really. My father refuses to do succession planning, and has managed to run all my siblings and I out of the business individually, and has subsequently severed ties with my brother and I.
    I wish that all business owners would read articles on on it’s done properly, but it seems that many are alpha-types and refuse to see another side where they are not the only ones in charge.

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