Business Succession Planning - Ensuring The Successful Transition Of Your Family Business
If you own a family business, one of your primary concerns should be the business succession planning
. Since there is a need to transfer the ownership and management to the next generation, you have to prepare the future member who will be in charge of the organization. Failure to prepare the key person appropriately could mean financial and even business loss for your company.Management
The management of the organization is not the same as the ownership. In some cases, only the active and interested children assume the roles. There are also times when an outsider takes the role. Although the latter is more difficult for the owner, it can be the only option if no one in the family is interested and qualified to take the key position. Since the transition is quite difficult, you need to involve the whole family in the succession planning process.
Ownership
If you want to ensure smooth business succession planning, abandon the idealistic thought that each of the family members must have an equal share. Although it is good in theory, the practice may not be healthy for your company. Mostly, the person who is most active has the largest share. However, you can make the transition fairer by engaging into a buy-and-sell agreement and guarantee a sufficient retirement income for the others.
Transition
During succession planning, the transition is one of the hardest parts. It can be emotionally and financially draining for the outgoing executive to give up the role and assume less responsibility. At the same time, the identified key person needs to adapt to the responsibility. The gradual transition gives the key person time to develop his potentials and prepares the retiring executive with his diminishing roles.
By having good business succession planning, you have the assurance that the company you have built will continue to prosper in the next generation in your family.
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