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\n\t\tOpinions expressed by Entrepreneur contributors are their own.\t<\/p>\n
Every business owner has a plan \u2014 or at least they think they do. They know<\/a> where the important documents are stored, which child<\/a> has expressed interest in the business, and what they want to happen if they retire, become disabled or pass away. The problem is that knowing isn\u2019t the same thing as documenting, and when a crisis occurs, your family doesn\u2019t get access to what\u2019s in your head. They get access only to what\u2019s in writing.\u00a0<\/p>\n I\u2019ve talked with thousands of business owners and their advisors throughout my career, and one truth recurs: families rarely struggle because they lack love for one another. They struggle because they lack clarity. When a founder\u2019s wishes are undocumented, spouses are left making impossible decisions. Children are left interpreting intentions. Advisors are forced to fill in gaps. At the very moment a family should focus on supporting one another, they are instead trying to answer questions that should have been resolved years earlier.\u00a0<\/p>\n The result is often confusion, conflict and damaged relationships. That\u2019s why one of the greatest gifts a business owner can leave their family isn\u2019t wealth \u2014 it\u2019s clarity. A written legacy plan<\/a> provides direction during moments of uncertainty and helps families move forward with confidence rather than guesswork.\u00a0<\/p>\n One of the biggest mistakes business owners make is assuming they have more time. They tell themselves they\u2019ll create a plan after the next acquisition, after the next growth phase, or after they finally slow down. The reality is that life doesn\u2019t always cooperate with those timelines.\u00a0<\/p>\n At the Exit Planning Institute\u00ae (EPI), we often talk about the 5Ds: Death, Disability, Divorce, Distress, and Disagreement. These events account for roughly half of all business exits and often arrive unexpectedly. They don\u2019t care whether your succession plan<\/a> is complete, whether your children are prepared<\/a>, or whether you\u2019ve had the difficult conversations. They simply arrive, forcing families to make major decisions under emotional and financial pressure.\u00a0<\/p>\n That\u2019s why planning cannot wait until you\u2019re approaching retirement. A legacy plan is not an end-of-career exercise. It\u2019s a business and family responsibility that should begin now. When one of the 5Ds occurs, your family shouldn\u2019t have to become detectives searching for clues about what you would have wanted. The answers should already exist in a written plan that reflects your values, intentions, and priorities.\u00a0<\/p>\n We have a warehouse that is a multi-use space, and it offers a helpful example of how legacy can be understood.\u00a0<\/p>\n In one area, we have a museum of sorts: memorabilia from generations of Snider family entrepreneurs. We\u2019ve also documented 21 years of EPI. Additionally, we have a classic car collection that my son loves.\u00a0<\/p>\n Since I own a business with my dad and entrepreneurship is so central to my family\u2019s history, from the outside, you might think that my children will simply inherit<\/a> everything. But my son knows better. He knows that legacy must be earned. So, I made a deal with him.\u00a0\u00a0<\/p>\n I told him that if he cleans that warehouse every time I think it needs cleaning, he\u2019ll get the stuff inside it one day. Perhaps the lesson was too easily learned: the next week, without me asking, I found him in there during hour three of mopping the floors.\u00a0<\/p>\n He doesn\u2019t take for granted that wealth is inherited.\u00a0<\/p>\n When families begin talking about legacy, they often start in the wrong place. The conversation immediately turns to ownership percentages, inheritance structures<\/a>, and financial distributions. While those issues are important, they are not foundational.\u00a0<\/p>\n The first conversation should be about values.\u00a0<\/p>\n What does your family stand for? What principles guided the creation of your business and wealth? What responsibilities come with ownership? What kind of impact do you hope future generations will make?\u00a0<\/p>\n Families who establish clarity around values make better decisions when a crisis hits. They understand that wealth is not simply a resource to consume but a tool to create opportunity, strengthen relationships, and contribute to something larger than themselves. Wealth without context often creates entitlement. Wealth paired with values creates stewardship.\u00a0<\/p>\n This is why many successful family enterprises create written family values statements. These documents become a decision-making framework for future generations, helping them navigate opportunities and challenges long after the founder is gone. Markets will change, and circumstances will evolve. But clearly articulated values provide a compass that remains remarkably durable over time.\u00a0<\/p>\n A single family meeting is not a family governance system. Yet many business owners treat communication as a one-time event rather than an ongoing process.\u00a0<\/p>\n The strongest family enterprises I\u2019ve encountered establish a regular cadence of conversations long before ownership transitions<\/a> become necessary. Some families gather quarterly. Others hold annual family meetings. The schedule itself matters less than the commitment to creating space for honest dialogue.\u00a0\u00a0<\/p>\n These conversations shouldn\u2019t focus exclusively on succession planning<\/a>. They should explore family values, business performance, ownership responsibilities, philanthropic goals and long-term aspirations. Family members need opportunities to ask questions, voice concerns, and better understand both the opportunities and responsibilities associated with family wealth.\u00a0<\/p>\n Perhaps most importantly, these meetings help build trust. When communication occurs consistently over time, difficult decisions become easier because family members understand how those decisions are being made. Transparency creates confidence. Silence creates assumptions. And assumptions have a way of turning into conflict.\u00a0<\/p>\n I\u2019ve often said that silence destroys more family wealth than taxes ever will. Families that communicate effectively don\u2019t eliminate disagreement, but they create a framework for navigating it constructively. That may be one of the most valuable forms of legacy planning<\/a> a family can undertake.\u00a0<\/p>\n At EPI, we recommend that business owners plan<\/a> in three areas: personal, financial, and business.\u00a0<\/p>\n And even if there aren\u2019t any children working in the business, a family should still have a window into all three of those areas.\u00a0<\/p>\n According to our research in the 2023 State of Owner Readiness Report<\/a>, 39% of business owners plan to transfer the ownership of their business to their family.\u00a0<\/p>\n However, only 53% of families are aware of both the managerial and ownership transition plans<\/a>. Worse yet, 27% of owners have fewer than one family meeting a year regarding the business, or none at all.\u00a0<\/p>\n That means a business built with the intention of selling to a third party or transitioning via an Employee Stock Ownership Plan may transition to family instead in a time of crisis. Or the opposite. Either way, a written plan, based on family conversations, is key.\u00a0<\/p>\n Here\u2019s what must be included, at the very least:\u00a0<\/p>\n These items should not be surprising to anyone in the family. Issues of fairness vs. equality should be worked out in advance and widely known. In addition, those plans should be revisited as family dynamics change, family members develop new skills and interests in the business, and wealth changes.\u00a0<\/p>\n Most families will have robust discussions during these planning sessions, if not outright disagreements. You may benefit from having an advisor lead these proceedings, acting as an independent third party that has the company\u2019s and family\u2019s best interests at heart.\u00a0<\/p>\n<\/p><\/div>\n Every business owner has a plan \u2014 or at least they think they do. They know<\/a> where the important documents are stored, which child<\/a> has expressed interest in the business, and what they want to happen if they retire, become disabled or pass away. The problem is that knowing isn\u2019t the same thing as documenting, and when a crisis occurs, your family doesn\u2019t get access to what\u2019s in your head. They get access only to what\u2019s in writing.\u00a0<\/p>\n I\u2019ve talked with thousands of business owners and their advisors throughout my career, and one truth recurs: families rarely struggle because they lack love for one another. They struggle because they lack clarity. When a founder\u2019s wishes are undocumented, spouses are left making impossible decisions. Children are left interpreting intentions. Advisors are forced to fill in gaps. At the very moment a family should focus on supporting one another, they are instead trying to answer questions that should have been resolved years earlier.\u00a0<\/p>\n The result is often confusion, conflict and damaged relationships. That\u2019s why one of the greatest gifts a business owner can leave their family isn\u2019t wealth \u2014 it\u2019s clarity. A written legacy plan<\/a> provides direction during moments of uncertainty and helps families move forward with confidence rather than guesswork.\u00a0<\/p>\n<\/p><\/div>\nHalf of owners will experience one of the 5Ds\u00a0<\/h2>\n
Start with values, not assets\u00a0<\/h2>\n
Create a cadence of family conversations\u00a0<\/h2>\n
A documented plan, in three areas\u00a0<\/h2>\n
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