Succession Planning In Family Owned Business

Using words like "process” and "step” implies a prescribed order for your investigations.In fact, any of a number of situations can bring you to succession planning, so you can enter the process at any "step” along the way.

Succession planning is an important part of running a family business; however, only two out of three family-owned businesses have some type of succession plan in place, and only one in four have a plan that is sufficiently robust and documented, according to Pricewaterhouse Coopers.

Here are some important items to consider when developing your succession plan to ensure a successful and smooth transition.

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Make Things Happen has developed a process designed to help family business owners address all of the key personal, family and business issues underlying an effective succession plan.

Our process is not meant to replace the work of accountants, lawyers and other professionals — rather, to ensure that you have asked yourself all the right questions and considered all of the key issues before you visit these professionals.You also need to decide whether to divide up the shares equally or give the successor a controlling stake.Management may feel it deserves extra equity for running the company, but owners sometimes feel they deserve more because they do not draw salary.We believe the true starting point should be your needs and those of your spouse.When you have a clear idea of what you want, then it makes sense to broaden the discussion out to include the desires of the rest of your family.Your employees, for example, may want to purchase your business.Whomever you choose, provide ample time so you can train them rather than just dumping the business on him.Success plans for family-owned business can get so contentious that most families choose to sell it than deal with disputes among the family, according to "Bloomberg Businessweek." In one extreme case, the Puma and Adidas brands caused the town of Herzogenaurach, Germany, to split between and Puma and Adidas wearers.You should start planning the succession of your family business as soon as possible because it can take years to develop a leader strong enough to run the company. Small Business Administration suggests that the members of a family-owned business work out the basics of a succession plan, such as a mission statement, grooming one of the older children as a successor and deciding when to hand over the company, at a family retreat.Only when the family has developed a committed vision for its future in the business does it make sense to develop a strategic plan for the business to support the family’s goals. The owner’s vision The questions are deceptively simple but the underlying issues are many and complex.Developing honest and realistic answers can take some doing.

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Comments Succession Planning In Family Owned Business

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