Business succession planning when it’s a family-owned business

On Behalf of | Jun 21, 2022 | Business Formation & Planning

As the proud founder of a family-owned business, your eventual goal is to pass it to your children. You would like to do this when you retire, so you’re putting together a succession plan to make it happen.

It’s very important to get this right, both for the business and for your family. Passing a company down can be complicated, and many companies do struggle to succeed in the next generation. The following tips will help you as you get your plan in place.

Ask your children what they want

Never assume that you know what anyone wants or that they even want to be involved with the business. Talk to them well in advance to gauge their interest and find out what their own plans are. If you have multiple children, you also want to talk about what different roles they’d like in the company, should they all want to stay involved.

Start as early as you can

It also helps to start this process early. One of the best things that you can do is bring the individual in and work closely with them for a few years before you give them the business. This way, you can show them the ropes of running the company and they can get real-world experience, but you’re still guiding the ship.

Carefully balance the business and the company

This can be a tricky process because you need to think about what’s going to be best for the company and what’s best for your family. For instance, say that all of your children want to be involved, but you know that some of them are simply not capable of running the company. Do you put them in charge anyway, or do you divide the duties up between your children, even if that seems unequal to them? Questions like this are important to ask, though coming up with the solution in your unique situation may be complicated.

Creating your plan

These tips can help you get the process started, but there’s still much more to be done. It’s very important to know exactly what legal steps to take to create your succession plan.

FindLaw Network