Succession Planning for the Family Business

One of the primary reasons that family-owned businesses seldom survive past the second generation is the lack of formal succession planning. Even if retirement is on a distant horizon, a business succession plan is beneficial for most companies and can become absolutely essential to protect the business from the owners’ death, disability, divorce and other common occurrences.

Here are some tips on how to properly identify a successor for a family-owned business:

1. Begin planning early to ensure management continuity and maintain the value already built up in the business.
2. Identify one or more individuals who have a passion for the business, and don’t base the decision solely on family relationships.
3. Make the decision on a successor early enough to enable the business owner to transition the takeover slowly and to train the successor properly.
4. Get a valuation of the business. Due to the unsure economy, many small businesses have trouble getting access to outside capital, making it difficult to diversify ownership.
5. Get help from an attorney who specializes in small business law and estate planning to be sure you understand the tax implications of agreements commonly used in business succession planning.

Having a business succession plan ensures a smooth transition and increases the odds that your family business will survive beyond your leadership. A business succession plan can also help you minimize tax obligations as well as help make provisions for the current generation’s retirement from the business without adversely affecting the company’s financial stability.

Business owners that desire a smooth transition and equitable transition for 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.

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