Business Succession Planning Tips
If you are planning to pass your business to your children here are some tips and options you may want to consider:
- Carefully evaluate the interest and desire of the next generation to work in the business. If a child lacks the necessary interest and desire he or she will certainly fail to maintain the company.
- Turn over control slowly and over time. This will enable the second generation to become familiar with the business and the challenges of running it, allow children to make mistakes without jeopardizing the enterprise and allow you to make course corrections if the chosen heir is not working out.
- Structure a transfer that requires the next generation to “earn” the company. Set up a purchase over time so you receive much needed cash for retirement, the child or children get the business while learning it has to be earned – it is not merely a gift.
- Consider having family members who do not participate in running the business be creditors rather than owners. Non-participating family can receive a stream of income while not negatively affecting management of the business.
- Communicate with all family members about what you are doing and why.
