The challenge for many small family-owned businesses in succession planning lies in choosing a successor and deciding how the business will be governed when you are not there.
When someone starts talking about “business planning,” too often they just mean getting it off the ground or, if they have high aspirations, how to make it fly once airborne. Of course, “business planning” also is about keeping the business aloft through turbulence (e.g., bad markets) and even should the pilot-in-command become unable to fly (e.g., retirement, incapacity, or death).
In the end, a proper business plan for any small business, but especially for a family business, always entails some form of succession planning.
I just ran across a Forbes article that ran a few months ago, yet is forever timely on this subject. This article illustrates just how important coordinated succession planning and estate planning are in the context of a family-owned business.
If you run such a businesses, whether it’s a small shop or a large company, oftentimes your personal wealth and the wealth of the family are tied up with the business itself and your ability to keep running it. [Not to mention any lines of credit your signature and personal assets may secure.] What happens when you fall ill or pass away?
“That day” is not always a day you can see coming or you can delay.
The biggest hurdle to any succession plan is planning for your own successor. Let’s face it, running a business is tough and jumping on board while the carousel is moving can be a dicey proposition.
While the Forbes article has some specific advice, undoubtedly it will take measured thought and time to form and implement an effective succession plan. Then again, there also must be the contingency of deciding simply to sell the business. Either way, whether you ultimately continue the business or sell it, careful planning is a must.
In many ways, it’s not just for your own sake or for the sake of your family that the business has to be protected with proper planning. A business means employment for many people and often wealth for a community. It’s timely news, then, to find that small businesses created 55,000 new jobs this past November.
Oh, if no one has thanked you lately for being a business owner then by all means, then let me say “thank you.”
You can learn more about succession planning in the business succession planning on our website. Be sure to sign up for our complimentary e-newsletter to stay abreast of issues like these that could affect you, your loved ones and your estate planning.
Reference: Forbes (October 12, 2011) “Identifying a Successor for Your Family-Owned Business”