With any business, Succession Planning is important, but for family-owned businesses, it’s even more crucial.
This topic is not as easy to discuss when it involves family members, and failing to have a plan (or even the planning stage) can cause disputes and wreck relationships between family members, and can ultimately crush a business. But being able to set up a good succession plan will lead your family-owned business to success for years and decades to come. Here’s how:
It’s critical for family-owned businesses to have a succession plan early on, and to set proper expectations with family members. This early stage is crucial for identifying candidates who have the most interest, dedication, and skills to manage the business when the patriarch or matriarch steps down. There would be changes as time goes by and that’s completely fine, as long as you have a plan that can be altered to fit several foreseeable scenarios.
Understand Each Family Member’s Aspirations
In many cases, not every member is interested in the managerial side of the business. Some may be more interested in the charity work the business is already doing, some may only want to invest capital in it, and some may even want to take a totally different route. That’s exactly why you need to identify the candidate who’s most interested in pursuing the business’ success in the long run, and is committed in making it happen.
Develop the Successor Early and Broadly
Candidates should be trained early to be leaders, even before they finish college or before they’re 18. Help them develop their leadership and managerial skills across all business processes and help them identify their own passion and interests with your business. While it’s important for them to know how to handle certain tasks, do not limit them on what they can do and help them explore. This way, you can identify where they can contribute most in the future.
Succession planning regarding your family’s business may be the “elephant in the room”, but it shouldn’t stay that way. Start early with the right course of action to ensure success. Contact us today to get an expert succession planning advice, and read more great tips like these on my CPA blog.
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