Family business owners often hope to pass the business on to the next generation. If you simply have one child, this may be a relatively uncomplicated process. Once you know that they want to take over the business, you train them to do so and then help them transition into this role.
But many families have multiple children, and parents may be looking to include them all in the transfer of the business. Here are some things to keep in mind while doing so.
Consider what they want before looking into how to do it
Families are often focused on looking into how they can do things. How do they transfer ownership? How do they avoid any serious tax complications? How do they set up a positive financial future?
All these things are important, but it’s best to sit down with the family first and ask what they want. This gives you a goal. Who wants to be involved with the company? What is their vision for it? When do they want to start? After defining these types of things, then you can circle back to determining the best ways to do it.
Make it a family conversation
It’s often best to sit down with the entire family for this conversation. You do know your business better than anyone else. But making all the decisions for them can be problematic.
One thing to consider, for instance, is the exact roles that you want to give your heirs. They do not all have to get the same ownership percentage. They do not all have to have the same roles and job titles – in fact, it can often be problematic and lead to disputes if there’s too much overlap. Planning in advance allows you to find the correct roles for everyone, playing to their strengths and the needs of the business, which makes things go more smoothly.
Setting it up
Because this can be complicated, planning in advance is crucial. Take the time to look into all of the options you have when you set up your business succession plan.