In order to ensure the health of your business as you step away from a fully active role, you must set your succession strategy as early as possible. This is especially true when you are passing your business to your family! Here are 5 crucial succession planning strategies for family businesses that you cannot forget, regardless of your industry.
Many business owners make the mistake of thinking the successor in a business is responsible for the future vision of the business. Although the business should be updated into the modern era, the vision stands with the people who are doing the passing! Remember that you are the only one with experience running the business from the top! Consider this especially if you are dividing ownership of the business between multiple family members.
A successful business reflects the skill set of its owner or owners very directly. If your family members have a different set of core competencies from you, then you must strategize for this in your overall vision. It is usually best to write out descriptions for what each family member is best suited to do within the business and give this information to everyone who will have a part in the succession well before it is time to pass on the business. That way, everyone will have an idea of what he is expected to do.
Your business succession plan goes hand in hand with the larger estate plan you have for your family, so you shouldn’t do any of your business succession plans in a vacuum. There are tax implications as well, and you can implement many techniques to reduce your liability here. Although you should know the basics here, the most important thing you can do is get the appropriate legal assistance. Update all of your estate plans accordingly so that you leave your family in the best position possible as you pass your business to the next generation.
You do not have to give up your entire business in a succession plan, and you may not want to. You may choose to keep yourself on as an advisor if you want to have a bit of control or give yourself an annuity if you need it for retirement. This should be a part of the succession plan that you share with the rest of your family.
The best succession plans are done in a timely manner, each part done when it is most advantageous. If you are rushed, your business will likely suffer disadvantageous tax situations and arguments between family members.
When you are ready to pass your business to the next generation the right way, give the dedicated experts at Murphy Business a chance to help. You can get in touch with us by phone at (850) 374-8884 or just fill out the form that we have on our website for your consultation.