Difficult Business Decisions: Selling the Family Business
A lot of insurance agencies are family businesses; they’re passed down through generations and retain the name of the original owners. Others retain the name but are family businesses in name alone. In truth though, all agencies are family businesses, in one way or another. When you spend most of your working life and all of your working week with people, they feel like your family. Those feelings can make it difficult to make clear business decisions, especially about selling the agency.
Your Decisions Will Affect Both of Your Families
Selling your agency is already a difficult thought to consider. It’s even harder when you know that decision will affect the lives of the people closest to you. The sale of an insurance agency will always have an effect on the employees. The new owner may want to make staffing and procedural changes.
Those thoughts can affect the owner’s business decisions. If you’ve gotten too close to your staff, you may want to make sure they still feel like family after the sale. That’s an admirable approach, but you shouldn’t let it adversely affect the sale. As the owner, it’s your responsibility to make the tough business decisions. You should always make those decisions for the right reasons.
Business Decisions Should be Made for the Right Reasons
It’s important that you accept the potential effect on your agency ‘family’ after the sale. The sale will result in the loss of some close friends. We have encountered owners who believe they can maintain a family relationship with their staff despite changes brought about by a new owner. These owners say they’ll let the new owner make the changes, so that staff won’t associate them with the old regime.
In our experience, this is rarely the case. Most staff members look at a sale and think the owner got rich while they were left behind. In that scenario, it’s easy for staff to forget the good things the owner has done for them in the past. As a business owner, you need to understand that these kinds of emotions are a natural side effect of tough business decisions.
We frequently encounter situations where the owner has been overly generous with compensation to key employees or family members. The owner will tell us that the employees understand this situation and will accept an adjustment in their compensation as part of the sale. We explain that nobody thinks that they are overpaid and that the adjustment will not be well received. Owners are then disappointed at the lack of loyalty displayed by the employee. This is an example of one of our basic philosophies, “Run your business like it is for sale.”
No matter how much you want to protect your agency ‘family’, you need to make the right business decisions. When all is said and done, you’re the one who needs to make that decision so you should make it for the right reasons. Your staff may feel like your family now, but your family needs you to make the right business decisions for their future.
One piece of advice we offer to our clients is to Run Your Business like you are Selling it Tomorrow. Read why, here.