Business Litigator Helps Family Businesses with Financial Planning
For many small businesses owners, their business is their biggest asset, and the most important thing that they will pass on after they are gone. But even though their business can mean everything financially - and even emotionally - many people don’t engage in the succession planning that will save their business in the case of an accident, illness, or untimely death.
One of the most important aspects of succession planning is choosing the person or people who will run your business after your time is over. It used to be that a business was passed from parent to oldest child, but a less traditional option may be better for your family and for your business, such as:
A niece or nephew
A more distant relative
A close family friend
An unrelated employee
Questions to Ask When Choosing A Successor for Your Family Business
Who is passionate about your business? It’s normal to want to pick your oldest child, but you must keep in mind that the best person for the job is not necessarily the person who wants the job most. Who has shown interest in the business, and who is passionate about your products and/or services?
Who has the skills to lead and manage? Your choice doesn’t have to know everything about your business yet, but he or she must have a love of learning and a certain set of base skills to be successful. Can they manage others? Are they independent? Can they think outside of the box when necessary?
Who wants to stay in the area? You might have a child, sibling, or niece/nephew who has all of the right skills and who is passionate about the business, but who has other interests or goals. They might not want to stay in town and devote their life to what you have built. Choose someone who is comfortable choosing to carry on tradition.
Don’t choose a successor based on who you like best or who treats you best. Also don’t make a wishful choice, hoping that your successor will change or mature once the business is in his or her hands.
Involve Others in Your Choice
In a family business, it is common that family politics and emotions will be involved in your choice. In some cases, multiple people will want to fill your shoes, while in other cases, your family members may only agree to take the job out of a sense of obligation.
The best way to navigate all of these problems is to communicate openly and honestly about your business’ needs and your own wishes for the future. Your successor should not be surprised by his or her new role in the event of your incapacitation, death, or retirement. Rather, your successor should be told about your succession plans and educated in the months or years before the business is turned over.
Business Succession Planning for Family Businesses of All Sizes
Having a plan is always good for business. Having a business succession plan is vital to the survival of your family business and the financial security of your loved ones who are supported by that business.
It’s never too early to start planning, and it’s never a bad idea to have a plan in place in case of an emergency or accident. At CKB VIENNA, our California business attorneys can make sure that your family business is prepared for change, whenever it comes. To schedule an appointment or to speak to a lawyer, please please contact us today.