Some people delay creating a succession plan for the family business. Many assume this kind of plan will develop naturally. Others simply view the task as overwhelming.
However, in the case of a family-owned business, a succession plan has many benefits including the preservation of harmony among family members.
Operating your business without creating a succession plan is like walking on a high wire without a net. In a family-owned business, the plan you develop can address the emotional ties to the company and make the transition easier when you are no longer here. A properly drafted succession plan can address leadership objectives, ensure professional development, set goals and ensure that the management team is invested in the company’s future success.
Valuing the business
What is your business worth? The value of your business will have an impact in many areas related to succession planning:
- Gift and estate taxes
- Retirement plans
- Shareholder agreements
- Compensation levels
- Finance strategies
- Insurance matters
- Market targets
- Profit distribution
You need to know the value of your business in order to preserve its worth and its growth potential. Both will be essential in your plan to pass the company along.
Creating a guide for the future
With the help of an experienced estate planning attorney, you can develop a streamlined succession plan that will transfer your company to the parties you wish, such as the next generation of family members. The succession plan will act as a guide for those who come after you so that the family business will continue to grow and prosper.