Importance Of Succession Planning In Family Business

Meeting times should be formally set so the press of business doesn’t derail this process.

Once a basic plan is set, meetings with all of the family members are needed to plan/discuss the steps needed to ensure a successful transition and agree upon a timetable.

Bureau of the Census, about 90 percent of American businesses are family-owned or controlled.

One way to ensure that your business continues to thrive in your absence is to incorporate a business succession planning component into your comprehensive estate plan.

If not out in the open, the assumed future leaders of the business will exit out of frustration that their day to lead may never come.

ENSURE COMPLIANCE AND BEST PRACTICES Before you can transfer the company to the next generation you must have something of value to transfer.To overcome this challenge, family businesses must engage in succession planning and recognize the special “people” aspect of this planning.While succession planning involves buy/sell agreements, estate planning, etc., it also involves taking into account the people and the family dynamic involved in transferring a business from one generation to the next. The following are some best practices the family business should not ignore.This creates family drama because the chosen one may be perceived as the favored child and this causes problems at home and at work.However, no matter who is chosen to lead the company into the next era, the leader must be adequately trained.As a business owner, you probably had to struggle to get your business up and running and turning a profit.A small business faces all kinds of threats to its success, from economic downturns to natural disasters.Realistic assessments of talent (or lack thereof) and how to improve such shortfalls, as well as how to accommodate the desires of the generation in control, must be openly discussed and addressed.The future leaders must communicate their expectations.The second generation of family business employees may think they are ready to take over the reins and are going to be handed the keys to the kingdom any day now.The first generation may think these youngsters are not ready.

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