Succession Planning for Owners of a Family Business

Succession Planning for Owners of a Family Business

If you own a small business, there is probably at least some part of you hoping to pass the reins on to one or more of your children. After all, spending so much time and effort on something that’s not going to last doesn’t sit well with most entrepreneurs.

It may be difficult to look at your children when they are small and envision them running your company some day, but it can happen if you plan for it. Here are some tips:

Start young. Exposing your children to the family business should start when they’re young. If they see how much you enjoy working in the business, they are more likely to want to become involved when they are older.

Start them out somewhere else. Every child needs to know they can succeed on his or her own, and that their success is not reliant solely on a family relationship. Your company can also profit from valuable experience gained elsewhere. Have them work somewhere else for a few years after college.

Start them out slowly. Start your children out where you started – at the bottom. Even if they are expecting more, they need to pay some dues before reaching the top. Don’t have them report directly to you. Let them get to know your customer base so your customers will be comfortable when it comes time for a transition. To head off any resentment from other employees, make it clear that a family member will be taking over the reins some day.

Start them out differently. If more than one child is interested in working for the family business, be sure you tailor their responsibilities to their skill sets. One may be better as a CFO and one may have CEO talents. One may be better just sitting on the board. Parents have a tendency to want to equalize, but every child is different – let their interests and skills guide you.

Start with a plan. One of the main reasons a family-owned business seldom survives past the second generation is the lack of a formal succession plan. A business attorney can help you develop a business succession plan that will provide continuity when it’s time for you to step aside. Your attorney can also counsel you on the tax implications of agreements commonly used in business succession planning.

Business owners seeking to protect their business interests should seek a qualified, competent advisor for assistance. Contact one of the experienced Florida business attorneys at Jurado & Farshchian, P.L., at (305) 921-0440, or email us at info@jflawfirm.com. We offer free consultations to business owners seeking to find the right attorney to meet their business’ legal needs.

 

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