Sooner or later, it will be time to “hand over the reins” to the younger generation. But it’s not as simple as walking out the door at retirement time with a few plaques in your hands. In order to improve the odds for continued success of your family business, you need to develop a plan of succession.
This situation may be complicated if you already have several relatives working for you. You may have to groom one of them for the top spot or divide up the responsibilities in a reasonable manner. Either way, you could be facing some difficult choices in the near future.
With that in mind, here are several practical suggestions:
- Establish strict ground rules for hiring family members. For instance, don’t just hire a nephew or niece because of family obligations. Establish qualifications for each position regardless of a person’s family connection.
- Teach your successor the ropes so he or she can gain the technical expertise and skills needed to lead the company. Implement a plan to evaluate job performance.
- You might rely on an independent board of business experts. They can help choose and train a successor if you haven’t designated a replacement.
- Find a mediator to break stalemates. When conflicts threaten to disrupt the business operation, your business advisers may be able to patch things up.
- Set up family meetings. Be honest in your discussions. While you lay out your vision of the future, allow younger family members to express their own goals.
- Maximize potential tax benefits. With professional assistance, you may be able to transfer business interests without suffering any dire tax consequences.
A successful plan for succession should address all of these issues — and more. Don’t leave the fate of your business to chance.
Contact us for assistance.