Family Business Succession Planning

An important issue that requires early planning is Who will take over when the family member managing the business dies or retires?

Planning is especially critical when the top family member approaches retirement age or is in poor health, but the best time to prepare for orderly succession is before transition looms.

A family meeting in a neutral setting away from interruptions can help focus discussion, perhaps with the assistance of a professional consultant to guide the agenda.

Consideration on the agenda should be given to

* Family goals for the future.

* Plans of next-generation family members.

-- Who is interested in staying with the business?

-- Who has the most aptitude for leadership?

-- What if several able younger family members aspire to lead the business?

-- What role will other younger members play?

-- What if next-generation family members are not interested in the business?

* Grooming of future leaders.

* The most likely times major transitions will occur, barring unexpected illness or death.

* Preparations of present leaders for stepping down.

* Financial aspects of leadership transitions.

The importance of preparing for succession before a new leader must take over cannot be emphasized too strongly.

Small Business Media and Small Business Content