Recently I met with one of my clients who has been struggling with passing their business to the next generation. Every family business faces similar challenges when they attempt to “pass the torch” to the next generation. The technical term for passing the torch is “Succession Planning.”
In this post, we will discuss some of the family business succession issues that you should be aware of.
In the March 2011 issue of Trust and Estates Magazine, an article written by David Thane Leibell entitled Succession Planning provided some interesting statistics.
Over the years, as I have assisted clients with this transition, I have made the following list of the challenges most businesses encounter:
The process of succession planning is much more successful if the founder or family leader has an idea of what their business, personal, and family goals are. I often ask my clients, “do you have a one, three, and five-year plan personally and for your business?”
Most clients do not have a plan, so I ask them to imagine what their perfect situation would be with work, family, and finances, then list out what their life would look like if everything went exactly how they dreamed it would. Once someone knows what they want, a strategic plan can be developed to achieve their ideal situation.
Succession planning typically includes the following elements:
To assist families in getting started on the succession planning process, CMP has developed a Succession Scoresheet. Please download this free tool below or contact the professionals at CMP to schedule a consultation for your family-run business. The sooner the succession planning process is started, the more likely your family business will survive to the next generation.
If you want to read more about this topic, including passing down a family business, read our post entitled: Succession Planning for a Family Business: Should You Sell or Pass Down the Family Business?