Eventually, everyone wants to retire. When you own a family business, retirement becomes more complicated. Owning and building a successful business is one of the most rewarding tasks you can undertake in your lifetime. It takes a great amount of dedication and sacrifice. Naturally you want to ensure that the business you invested so much in is protected. You also want to ensure that you have enough money to enjoy that retirement that you’ve earned. But… what actually happens to the business at that point? Do you pass it down to the next generation? Do you sell it? Do you maintain ownership and hire outside management? What ARE your options? Perhaps "retirement" is a dirty word to you, even if you plan to "die with your boots on" there will still come a time when your relationship to the business will change. You may not want to rock your life away but you may prefer to transition to a role that is more like the Chairperson of the Board than CEO - leave the day-to-day to someone else yet keep your eye on the big picture of the business that you helped to build and still understand better than anyone. ...and of course - like it or not - someday we all die. Succession planning is the way to answer these questions and set in motion the smooth transition between you and the future owners of your business. With family businesses, succession planning is especially complicated because of the relationships and emotions involved. It also means discussing difficult topics such as aging, death and financial affairs. But even though it can be uncomfortable, succession planning should be a priority for any family business. These are just a few of the reasons you need a professional to take you through the process. Approximately 70% of family-owned businesses do not survive the transition from founder to the second generation. Most often the demise is due to taxes or family discord. A good family business succession plan will cover these issues. Management and ownership are not necessarily one and the same. You may choose to transfer management to just one of your children while passing ownership equally to all of your children, whether they are actively involved in the operation or not. It is important to prepare in advance to minimize taxes upon death. A professional who specializes in Family Business Succession Planning can provide invaluable advice about these tax strategies. Family is the primary emphasis of Family Business Succession Planning. In preparing for the future management of your business, how ownership will be passed along, or minimizing taxes, you won’t be able to help thinking about how your decisions will affect your family. It is important to start early. The longer you are able to spend on family business succession planning, the smoother the transition process is likely to be. You can’t start too early; however, you CAN start too late. It is also important to involve your family in the discussions of your planning. Allowing your family to hear your desires and plans from the beginning is the surest way to avoid family discord. An open dialogue among the family members is the best beginning to the process of a successful succession plan. This allows the process to focus on the personal feelings, ambitions and goals of everyone concerned. You will need to look at your family in a very realistic way and plan accordingly. You may want to pass your business down to your son, but what if he has no interest? Or what if he just doesn’t have the necessary skills? It may be that there are other family members who are more qualified and capable. You will need to look at the strengths of all possible successors as objectively as possible. Think about what is best for the success of your business. It is not necessary for everyone to have an equal share. Perhaps the successor you have chosen to run the business should have a larger share than the successors who have joint ownership, but are not actively involved in the running of the business itself. The successor you choose will need time to work alongside of you in order that YOU train them to take over. A successful transition is far more likely if you work with your successor for a few years before handing over the reins. BSR specializes in Family Business Succession Planning. We will facilitate the process of working through both family and succession plan issues. A good succession plan will ensure that your company AND your family continue to thrive.
Succession
Planning