Most of us find ourselves riding along the highway of life, eyes fixed on the future, occasionally checking our rearview mirror to admire the money, success and family security we have achieved so far. Then suddenly an emergency appears in front of us, and we’re forced to slow down, swerve or brake.
There's no warning light that we might be drifting away from values as we earn more and want more. No alarm bells to alert us that we are overindulging our kids, not until we realize they don't know how much a gallon of gasoline costs. No airbag going off when we women "check out" of the family financial discussion until an accident or illness becomes a big bump in the road. It's not time to pump the brake or accelerate. It's time to remind ourselves why we got on this route in the first place.
Though most of us don't exactly have a strategy in mind when we start our families, it's precisely what most of us need. Any wise entrepreneur would develop a business plan before launching a new venture; it is a roadmap toward the future. Families can use the same approach, focusing on values and goals that unite them for long-term profitability and a safer journey.
As with any business plan, this effort requires input from all of the stakeholders in order to be successful. It can be designed at any stage, and will grow and change as the family does. Here’s how to get started:
1. Set the Mission: A strong business begins with a thoroughly thought-out mission explaining the purpose of the enterprise. Families can adopt the same strategy, putting together a statement that identifies the members’ shared vision of the future, such as, “The mission of the Andrews family is to keep our family connected, be grateful for our good fortune and share it with others.”
2. Define the Values: These are the guiding principles that provide a compass for how people behave. If the principles are clear, the family will not only weather many of the storms that come its way — it will grow stronger. What values are most important to your family? Do you value honesty and believe trust must be earned? Is it most important that your family members be good stewards of the earth’s resources?
3. Take Care of the Stakeholders. Companies take care of their stakeholders if they wish to grow and retain the best people. A family also has a responsibility to its stakeholders — in this case, family members. Just as shareholders who get a return invest more and stay loyal, family members will, too. So be attentive to their needs, both economic and emotional. A larger clothing budget or graduation party might seem great, but it might be encouragement to pursue their passions that would really make them happy.
4. Establish Goals: Laying out goals and objectives is standard operating procedure with a corporate business plan. The same ought to be true for families. Successful families decide jointly what they want to accomplish and when, and then set about crossing off these accomplishments as a team and plan on setting new ones. Goals may be financial, such as making sure all family members understand the family’s investments, or personal, such as an annual family bonding trip to stay connected.
5. Execute on Strategy: Decide how you’re going to reach these goals. Where should your energy be focused? How should your resources be allocated? What are the barriers you can foresee and how are you going to avoid them?
Reaching family success requires a plan, a staff, a timetable and markers along the way. With a plan in place, a family can better deal with the unexpected challenges that life’s road presents, and when the plan is achieved a family can celebrate its successes together.
Linda Davis Taylor’s book, “The Business of Family: How to Stay Rich for Generations” will be released this summer by Palgrave Macmillan.
|City National Bank, as a matter of policy, does not give tax, accounting, regulatory or legal advice. The effectiveness of the strategies presented in this document will depend on the unique characteristics of your situation and on a number of complex factors. Rules in the areas of law, tax, and accounting are subject to change and open to varying interpretations. The strategies presented in this document were not intended to be used, and cannot be used for the purpose of avoiding any tax penalties that may be imposed. The strategies were not written to support the promotion or marketing to another person of any transaction or matter addressed. Before implementation, you should consult with your other advisors on the tax, accounting and legal implications of the proposed strategies based on your particular circumstances.|