Running a family business comes with a lot of day-to-day demands. So, the owners of such companies may have their thoughts fixed on the present. However, it can be critical for such owners to also plan for the future. This includes having plans for what will happen with the business when they are no longer running it.
This is called succession planning, and failing to do it could create a lot of problems for a family business. If the owners of such a company retire, become incapacitated or die without having a firm succession plan in place, it could lead to confusion and in-fighting among the owners’ family and loved ones over what will happen with the company. This could both be damaging to the company and create a lot of tension and conflict within a family.
Despite the importance of succession planning, research suggests that it may be something that many family business owners haven’t done.
One thing that might tempt such individuals to put off succession planning is assuming that it is something that really doesn’t need to be addressed until retirement is right around the corner. However, the reality is that, when it comes to succession planning, getting an early start is very important.
For one, there is always that potential for the unexpected to strike (like a sudden illness or tragic accident) that could cause the issue of who will take over a family business to come up much earlier than was expected.
Also, the passing on of a business touches on a wide range of issues, and it can take time to properly address all of them. For example, it can take a fair amount of time to determine who would be the best person to take over the company. It can also take a while to ensure that this person has all the training, information and experience he or she needs to be in a strong position to help keep the company successful.
So, succession planning is something it is generally very important for family business owners to not just keep putting off until another day. In addition to not procrastinating, another thing that is very important when it comes to succession planning is making sure the plan is well-designed and well-tailored to the unique situation of the company and the family. Skilled estate planning attorneys can assist with this.