Staying On The Right Side Of The Law

Tips For Succession Planning In Your Family Business

If you're the founder of a family business, your focus is probably on getting things done on a day-to-day basis. However, it's important that, as you get older, you start thinking about how the business will continue when you want to retire. Succession planning is vital for any company, but when you are working with family, this kind of planning can be a challenge. Use these tips so that your business can continue to flourish when you pass the reins to another relative.

Train Your Successor Now

One of the things you may be aware that you need to do is to select someone else to take over. However a mistake that many family business owners make is not allowing their successor to do much until they are gone. This can be a major mistake, as the person you choose has a lot of pressure to live up to your expectations and keep the business afloat while they're learning to do your job--in addition to whatever responsibilities they might already have.

Your best bet is to make a decision about who you want to take over and to start training them now. Allow them to run things for a few days, then a few weeks, so you can observe their work style and offer feedback. This way, when you are finally ready to retire, they are already comfortable and you don't have to field phone calls all day long asking for help.

Arrange Joint Ownership

Your successor might need to go to probate court to settle disputes regarding their ownership of the business property after you pass away. They could face challenges from others in the family who feel that the property is now legally theirs. That's why it's important that you handle legal ownership issues now. If you aren't prepared to sell the business real estate and property to the family member you've chosen, arrange for joint ownership of the business. When you pass on, your successor will already be the owner of the property.

Avoid Being Secretive

One of the worst things you can do as you're working on planning your succession is to be secretive about what you're doing because you're afraid you will hurt the feelings of various family members. Some relatives might have expressed interest in running the business after you leave, and might be angry that you chose someone else. However, It's smart to be as open with it as possible so that people can start to process their feelings and air their grievances while you are still around to answer questions and discuss things with them.

Allow these tips to assist you as you begin succession planning for your family business. Seek the help of a family business succession planning consultant to guide you through this process so your business can survive intact.