I was recently reminded that a small family business impacted my father’s life (and indirectly my own). My father was raised by a single mother, and his uncles helped to support him and his mom through their family sweater business. His uncles had a special niche: They would go around to the small businesses in the New York City area that were manufacturing sweaters and negotiate a lower price to buy the ones that were damaged and so couldn’t be sold. They would bring those “irregulars” back to their own shop, where workers would repair them as best as they could, and then the uncles would sell them to local discount stores. Once my father was old enough, he worked at the business part-time to make extra money. Although the business was small, it allowed my uncles to live a comfortable lifestyle, and importantly for my father, to make enough money to put him through medical school. When my uncles needed to borrow money for their business in later years, my father was there to help. By the 1980s, sweaters were being made more cheaply overseas, so the business closed. As a child, I didn’t enjoy wearing those irregular sweaters, but I learned from my father (who learned from his uncles) the importance of a family business that allowed members of the family to help and support one another.
Whatever the size of your client’s family business, our Family Businesses Committee Report should help you deal with the issues it faces. If the family with a closely held business wants to sell, “Planning for the Sale of a Closely Held Business,” p. 38, by David T. Leibell, Carrie J. Larson and Brian Schimpf provides a roadmap for helping the family through this process. And, in “Who’s in Charge?” p. 48, Patricia M. Angus uses a new model to help advisors understand the critical question of who owns the family business. Finally, in “The Effect of Generational Changes on Family Businesses,” p. 53, Ashley Remmers reviews the changes in planning techniques as family businesses go from one generation to the next.