A significant number of businesses in the U.S. are started by families. As a business owner, you may wish to keep this going once you step down.
While including your children in a succession plan can be beneficial, it’s important to prepare them as well as possible. Outlined below are some important points to consider.
Start the planning early
Passing down a business should never be rushed, whether or not family members are involved. Taking on leadership is a huge responsibility, and it’s important to set your children up for success. Mentoring is extremely valuable and it should be utilized as early as possible. You can mentor your children yourself or leave it in the hands of a trusted senior team member.
Once your children have been fully trained in your business operations, they will have the confidence and skill set required to oversee its continued success.
Preventing family conflicts
Creating a succession plan that does not risk family conflicts is important. Is one of your children going to be jealous if you place the other in a leadership position? Have you left a family member out completely?
Having an open and honest discussion with your family before putting your plan in writing can help to prevent conflicts.
Financial implications
There are several different strategies for passing your business down to your children. It can be done in one go, but this can result in significant taxes. One way to reduce the overall cost is to gradually give shares over time or include the business in life insurance policies.
Keeping the business in the family has lots of potential benefits. To ensure that your succession plan meets your needs, it will help to seek some legal guidance.
