In business
Starting a new business?
Structuring your business?
Managing and developing your business?
What happens next?
Personally
For an independent view
To deal with the annual panic - the tax return!
Tax planning
Passing your business to the next generation
You are approaching the point in your life when you decide to address the $64,000 question - will you be looking at the appropriate time to sell the business to an outside organisation or are there members of your family who would be able and willing to take over the business? You discuss the matter with members of the family, some of whom already work in the business and establish that there is genuine interest in from family members in taking over the business from you. You now decide to address the issue of succession planning.
The changeover to the next generation may appear to be a seamless exercise to undertake, but the process requires as much careful planning as if you were selling the business. Here are some practical tips to help you pass the business to the next generation:
Is the Family the right option?
Are you absolutely sure that the selected family members will be the right people to take over from you? Do they have the necessary skills and aptitude to make a success of the business once you have retired? For those not already working in the business it is important that timescales be agreed as to when they will join the business. You will then need to train, nurture & provide support each of them and establish their individual strengths and weaknesses.
Skills Assessment
You then need to assess the skills of each of them and discuss with them how they will work as a team. With these points in mind you will need to decide or agree a process for deciding which member of the family should take the helm. Who ever you appoint to lead the company, it is important to ensure that the other contributing members of the family are given roles which suit their talents and meet their aspirations. Whatever structure you decide it is important to remember that good leadership and focus on the business objectives are the key to running a successful and profitable business. Family members need to be objective in their business relationships with each other if they are to resolve differences constructively.
Succession Planning
Develop a written succession plan well in advance of the handover and ensure that this plan is part of the overall business plan. Define management responsibilities and the long-term objective regarding family shareholdings. Of course nothing is written in stone but it is important that family members are committed to the continued successful development of the business.
Experience Review
Ideally, before succession takes place each member of the family joining the business should have gained experience at a senior level working in other organisations and have developed an understanding as to how businesses work. This will help bring experience, new ideas and skills to the company and provide them with greater creditability both inside and outside the family group.
We offer guidance and assistance to entrepreneurs wishing to pass on their business to the next generation. If you would like to discuss any aspect of handing over your business to your children then please contact us.