Succession planning in a family business is crucial to ensure a smooth transition of leadership and ownership from one generation to the next. Starting the process of succession planning early and developing a thoughtful plan can help address various challenges such as family dynamics, emotional attachments, retaining valuable employees, overcoming resistance to change, and financial and tax considerations.
A well-prepared succession plan paves the way for a successful transition, securing the future of the business and its legacy. Ferguson Alliance offers a ten-step process to guide you.
Initiate Discussions and Seek Out Advice
The first step is to open discussions. Keep the initial circle small. Your board, your executive team, your trusted advisors. Developing a broader communications plan comes later.
Succession can be a complex and sensitive undertaking with a lot of moving parts. Don’t be afraid to seek out qualified advice. Your banker, your attorney, and your CPA can provide some insight, but may not be the most knowledgeable in this area.
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Identify Goals and Objectives
These may include things like:
- Maintaining family harmony: minimizing conflicts and maintaining positive relationships.
- Preserving wealth: protect and enhance the family’s wealth and assets through the transition.
- Ensuring competence and capability: making sure the successor has the necessary skills, knowledge, and experience to successfully lead the company.
Is the business ready for succession? Do you have a successor in mind? Are there multiple candidates? How ready are they to step into the role? In many cases, the business may be ready, but the family members are not. Or vice versa.
Develop the Successor with a Training and Mentoring Program
Once you have a person (or multiple people) identified, build a training and mentoring program. The more time you have, the better.
Consider External Candidates
Sometimes it’s helpful to bring in a non-family member as a bridge when the up-and-coming successor isn’t ready yet. If so, external candidates will play an important role in your succession planning.
What are the next five steps? Continue reading at Ferguson-Alliance.com.