You built your business from the ground up, you’ve led it through successful times, and eventually you’ll want to pass it on to the next generation of your bloodline. Even if you’re a decade away from even considering retirement, you need to start thinking about succession planning.
Succession planning has various bases that need to be covered, especially when it comes to a family business, and we can help you prepare for it all. Today we’re going to go through some of the key points of building a solid family business succession plan.
Family Business Succession Planning Needs to Start Early
If you plan to have a relative take over the reins, when you’re ready to step down, then you’ll want a solid plan in place to make that transition as smooth as possible.
As you’ve probably realized in your time with the family business, working with relatives is unique and there’s often more emotions involved; however, the emotional aspect may not be what sinks you; rather it could be poor financial preparation. Read on to get expert insight on the best steps to take.
Before we dive in, let’s get real about the numbers—a business transition can take upwards of two years to complete whereas a family business transition can last anywhere from five to TEN! Of course, it all depends on the size and complexity of your company, but it goes to show that a succession plan can help keep turbulence at a minimum.
Expert Tips for Succession Planning
For starters you should be talking with your kids long before planning takes place.
Do they even want to work in the family business?
If so, be sure that you are open about how taking over a family business means committing your entire life and career to the company. Are they ready for that?
Seek Expert Advice
Even families who have great relationships can see connections broken when it comes to discussing business. We recommend speaking with a family counselor or mediator as a resource to aid the discussion of succession, as well as preparing yourself for stepping away from the position when the time comes.
Define YOUR Vision
Get clear about what you really want for yourself.
How do you envision yourself in your golden years?
Do you have what you need financially to support this vision?
This is one of the reasons that it is so important to start succession planning years in advance. We’ll help align your goals and your business strategies so that you can live out your dreams.
Prepare Your Successors
Take time to mentor your successor and give them real responsibilities that grow in the years prior to transition. Most importantly, when it comes time to hand over the business, make sure you are supportive and okay with letting go of control.
These 4 tips are just a few of our recommended approaches to starting a family business succession plan. We hope they will be helpful as you begin to prepare for this big occasion!
Now let’s turn our focus to the actual process.
While every company is certainly unique, you can expect the process to resemble these 4 steps:
1. Collect Information
All contracts, estate plans, business documents, etc. will be reviewed and then organized and made current.
Like any other business transition, family businesses also require a valuation. We can provide this service and will give you a reliable valuation.
3. Draft Business Continuation Plan
Go through and establish any potential disruptions that could arise during transition, hammer down a plan of action, and prepare contingency plans.
One of the most important aspects of a succession plan is deciding whether a business should be restructured or reorganized.
This is a very rough outline of the process, but we wanted to give you a taste of what to expect. If you’re interested in getting a more in-depth explanation of creating a viable family business succession plan, let’s talk!
Saddock Advisory has decades of experience and we’re driven by our commitment to our clients, many of whom have been with us since day one. We know what it’s like to run a family business and we want to see you succeed! Get in touch with our team today so that we can start crafting the best plan for your future!