The fourth-gen members of a family business were worried. Their dividend checks were smaller than they had been for decades. They were counting on the money to support their lifestyles and retirement. But the company had reached a growth ceiling. They couldn’t continue down their same financial path.
Most business-owning families grow faster than the business itself. The math is simple: If each child has two kids, and each generation follows that pattern, the family will have 14 members by Gen 4. (And that doesn’t include spouses.) If a growing family wants more distributions—but their business has already reached its growth ceiling—something must give.
There are three tradeoffs families must consider. Read about them here.
Read about what happens when the family business hits a growth ceiling here.
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