In the United States, family businesses are incredibly common. Many business owners use their companies as a way to provide for their family, and then they expect to leave them to their children when they are ready to retire or when they pass away.
If you know that this is something you want to do, it’s important to consider business succession planning well in advance. There are a lot of steps you can take to make it go smoothly. Here are a few helpful tips:
Start as early as you can
Don’t wait to train your heir. If you bring them into the company only a month before you want them to take over, you are not going to have enough time. It is better to use the three or five years prior, allowing them to work alongside you and learn how to run the business before they’re actually responsible for it.
Consider their skills and limitations
Parents often don’t want to think of their children as having limitations, but as a business owner, you need to consider what skills your child has or lacks. This is especially true if you’re leaving the business to multiple children. You want to put them in roles that are best for them, where they can thrive and the business can do well.
Ask them what they want
Finally, never assume that your children want to be part of the business or that they want to own it. Talk to them in advance and find out what they want. If it turns out that they are not interested in being involved, that gives you time to look into other options, such as leaving the business to someone else or simply selling it when you’re done.
As you create your business succession plan, take the time to carefully consider all the necessary legal steps. The more you do in advance, the smoother the transition will go.