For many business owners, family succession planning can be a daunting task. There are a number of variables and individuals to consider in the process. Advisors in different areas of expertise will need to be brought in. Also, what’s the timing for when the plan gets implemented? Again, there is a lot to consider and think about. Here are some valuable suggestions to consider for small business owners, the so-called small and medium enterprises.
Not All Children are Entrepreneurial
But before the process begins, owners must consider the idea that entrepreneurship does not necessarily pass from one generation to the next. It would be nice to have a child take over the business but that isn’t always the case. In fact according to the SBA, it occurs about thirty percent of the time. Fifteen percent of the time the business reaches the grandchildren.
So what’s a business owner to do apart from the ad creative method when it comes time to look at succession planning for the business? For starters, they definitely want to have a business conversation with their children. By opening up that dialog, they can gauge the interest level of their children in running the business. They can even start the grooming process if there is an interest.
The process can include working directly with the parent or it can include working with other members of the management team and staff. Usually, a comprehensive approach works best because it benefits the child and their knowledge base and it creates leadership for the business that is well-versed in the operations and planning for the business.
Seek Succession Plan Advisors
Business owners also want to talk with their attorney, insurance broker and other trusted advisors. Getting their input based on their knowledge and experience can help sail the sometimes rough waters that are succession planning. In addition to putting together a working plan if the child wants to take over the business, they can also work with the owner to identify potential internal and external buyers of the business. This is highly important and need to be considered on a serious note.
Eliminate Succession Uncertainty
The bottom line with succession planning is that owners can’t leave the future of the business uncertain. Suppliers, employees, family members are some of the many stakeholders who depend on the smooth operation of the business. Anything that can disrupt that, needs to be planned for. By doing that, all stakeholders get a clear understanding of the direction of the business and how they will or won’t be effected by certain life events.
So if you’re a business owner and you haven’t started succession planning, now is the time to get a plan together on who’s going to be involved in the process and how the business will carry on in your absence. Your stakeholders are counting on you. You are one of the primary reasons how the business will perform in future, and particularly amid the global COVID-19 pandemic and lockdown economy.
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