Posted on 26 August 2014
For most family businesses, planning for succession is one of the most critical yet toughest challenges they face. It is also something which is often “put off until tomorrow” in place of tasks which are considered more critical and which do not bring the same level of challenge amongst family members. With the planning process having the potential to exacerbate the special stresses of running a family business, it is no wonder that less than 30% of family businesses have a succession plan in place.
As reluctant as many families may be to tackle this issue, succession planning is the perfect opportunity to create a multi-generational business that embodies the founder’s mission and values whilst ensuring the business delivers lasting value to the family.
Make succession planning less painful
1) Start early – the longer you spend on your family succession plan, the smoother the transition will be.
2) Involve the family – for many family businesses, the family is the primary emphasis during succession planning. Having an open dialogue with family members and discussing goals and ambitions will make the process a lot easier.
3) Be realistic – you may want a certain family member to take a specific role – but is there another family member who is more capable? Take a close and realistic look at the skills, characteristics and ambitions of all possible successors as objectively as possible.
4) Work with your successor – train and work with your successor before you hand over the reins.
5) Ensure early consideration is given to the tax consequences... For example availability of key tax reliefs such as entrepreneurs relief or business property relief.
Kick-start the process
Start by engaging a qualified and professional advisor who is experienced in dealing with both succession planning and family businesses. By involving a non family member / adviser this can help to provide an independent challenge and remove some of the emotional strains. A specialist advisor can help match your objectives with a tailored plan to get the job done and help you to achieve your goals in the most tax efficient way.