Typically, business owners assume that their son or daughter will take over the business. However, sometimes the next generation doesn’t have the desire to take over the business. Here are some top tips for any business owner looking to build a sustainable family-owned business.
Make Sure They Are Actually Interested
First and foremost, business owners need to ask the next generation whether or not they have an interest in taking over the family-business. Do not assume they want to even if they are working for the business. Evaluate if they are capable of running the business. Once you know who in the next generation is willing and able to take over the business you need to develop an exit plan.
Developing New Leaders Takes Time
The earlier you know who the next generation leader will be, the better off you are. Strategically plan how they will proceed through the organization. Help the learn and understand all parts of the business. Make sure they understand the history, why you started the business and your dreams, help them identify their own passion and dreams for the company. Make sure they understand what it is to be a great leader.
Have an Exit Plan
An exit plan should include all the possibilities. Remember every owner will exit his or her business not matter what. How do I transfer the ownership no matter what the circumstances? What should I consider in an estate plan? How much do you need to live in your life style once you turn the business to the next generation? What is the business worth? How will the transaction take place, when will the transaction take place. What are the tax considerations? These and many other questions need to be answered and answered. It is advised to consult with exit planning experts included an attorney, accountant, investment advisor business broker/investment bank. Ideally, family-owned business owners know who they have in mind for taking over the company when the time comes. In fact, most business owners start their business knowing who they will leave it for when they can no longer be in charge. As a result, similar to creating a will, there should always be a plan in place for when the worst happens to the owner. Knowing the proper succession plan is in place for a family-owned business is critical in order to smoothly transfer your business to the next generation.
There are a variety of challenges associated with transferring a business to a new generation. The current leadership needs to deal with all the insurance policies, wills, and tax accounts before the process can be completed. Also, to ensure a smooth transfer, the current leadership should consider whether the retiring generation has enough money to live off of. Ideally, seeking out expert advice is always best to make sure that the transition is as seamless as possible.
Ready for your AHA! Moment? Call Allan Hirsh Advisors today!
At Allan Hirsh Advisors we believe in making a difference in the lives of CEOs and Business owners. We help you discover why you do what you do, understand your personal and professional visions. We ask questions, listen to you, give you feedback so you can make better decisions that align with your why and your visions and hold you accountable for your decisions. All this so you can improve your life and improve the lives of the people around you. If you are interested in taking your business to the next level then contact Allan Hirsh Advisors to learn how we can Create AHA! Moments for you.
Tune into AHA! Business Radio Tuesdays from 6-7 pm EST on CBS Sports Radio, 1300 AM to listen to Allan Hirsh and his guests discuss all areas of business. And don’t forget to follow Allan Hirsh Advisors on Facebook and Twitter too!