Planning for the future...
The successful transitioning of your business to family members can be the difference between being financially secure for life or potentially losing the value of many years of hard work.
More than 70 per cent of family-owned businesses do not survive the transition from founder to second generation. They fall prey to either tax consequences or family discord.
To ensure continuity, a succession plan is absolutely essential for every family business.
Regardless of your intention, here are six steps to help ensure that your succession is a success:
1. Formal or family meetings should be held regularly.
There must be a defined business agenda and open discussions encouraged to ensure no breakdown of communication between all of the family members involved in the business.
2. Plan for the exit of the older generation.
Plan for the exit of the older generation by setting dates and establishing retirement funds to ensure that they are well provided for.
Be aware young ones - iIf you fail to have the total support of the older generation they are unlikely to relinquish their position.
3. Decide who will replace the older generation.
Who replaces the older generation at the helm of the family business is a vital issue because in order for the business to succeed it may not always be appropriate for the eldest child to automatically take the lead (whether he or she expects to or not!).
There must be full and frank discussions on this issue and firm decisions made.
4. Seek professional advice.
It is crucial that all-important planning issues are discussed with your accountant, solicitor and farm adviser (where applicable).
5. Keep your plan current
It is imperative that you keep your plan current. Succession plans require periodic revision and updating to ensure that what you have agreed upon remains relevant.