Succession Planning: The Key to Keeping the Family Business Going
If you own and operate a family-owned business, you probably already know that mixing family and business can be tricky. Working with those whom you love can be wonderful and difficult at the same time, because family issues often interfere with business issues. One critical business issue that also affects the family is succession planning. Every small business must have a plan to turn over the company’s leadership —whether it’s to the next generation or to someone else entirely.
When no one — or everyone — wants to take over
Many parents hope that their children will have the desire and ability to continue the family business, but this isn’t always the case. Adult children have hopes and dreams of their own, and they don’t necessarily involve running the business their parents built. Those children also may not be the best choice for the position. If this is your situation, you may be forced to select somebody outside of the family to run your business when you are gone. This person should have a variety of skills to successfully run your business including management experience, accounting expertise, and marketing talents, among others.
The opposite problem can be just as tricky: What do you do when more than one of your children is interested in taking over the company? How do you choose? There is no easy answer, but the decision should be based on objective standards. Which of your children handles the demands of the company best? Which one has the skills to successfully run it? This isn’t a time to be “fair.” It’s a time to be smart. The right choice for which family member is the best person to run your business is usually obvious.
Your Bellingham business succession planning lawyer can help you find ways to make it “fair” among your children in other ways: You could give all of your children a stake in the company with non-voting stock. You may also consider creating a board of directors, which would allow the siblings to have a voice, with the ultimate decision-making power resting with the person selected to run the business.
Contact the law firm of Adelstein, Sharpe & Serka LLP for more information about business succession planning.