Family-run businesses form an essential part of the economy. Tradition, success, history, and their unique dynamic can create a thriving business that many may wish to see continue.
However, as with any business, the conversation about succession and how to continue the business into the future needs to be had.
With only 1 in 4 family-operated businesses considering their approach to succession formally, succession in a family business is one of the most significant viability risks to the actual business and needs to be addressed accordingly.
Family business succession maintains the strong connection between the two most important things in a family business owner’s life; their business and family.
Every family and family-run business is unique, and every transfer or succession of a family business will also be executed differently. If you are thinking about what your family business’s plan is for succession, you may want to consider keeping these critical factors in mind:
A succession plan for a family business needs to be created to move forward. It should detail all of the actions you intend to take (including the steps involved with both management and ownership succession).
It needs to be flexible, adaptable and ready to evolve as businesses (as well as families), change over time. Your succession planning process should be transparent and understand and align with the goals set for the business’s further development across the generations.
The most effective succession plans:
In a family business, communication is critical. A lack of early, constructive communication and planning on succession results not only in disagreement between family members and personal stress, but it also leads to business underperformance and potential erosion of family wealth.
Ensure that all aspects of the succession plan are conveyed to the appropriate parties and that they understand their roles and positions.
Want to know more about how succession planning could assist you with your life goals? Speak with your trusted advisors in preparation for this step.