The importance of Succession Planning in the Family Business.
At some point in the future you will no longer be running your successful business, this change will happen in one of three ways. The first is that you have made the decision to stop working and enjoy your retirement, the second is that your health has changed by illness or accident and the third is that you have passed away. This is inevitable for all of us yet very few have taken the necessary time to develop plans to ensure the continuation of the business and fair compensation to ourselves or families.
Working with our family can be one of the greatest delights of owning your own business. Watching your children participate in your company and working together to help it thrive is the true definition of a family business. However, as you near retirement, what happens to your company? With an succession plan in place, your business will continue to operate smoothly in your absence. Whether you’ve simply discussed the succession “next steps” or have a strategy in place, creating a clear outline makes the changing of management much easier for you and your family.
When should I start my business succession plan?
As with anything, the sooner you start, the more time you will have to prepare and adjust your plan. This is not only beneficial for you but your family members as well. As your family will play vital roles in the structure and continued success of your business, you will want to allow plenty of time for their input and allow for adjustments in the plan when required.
What are the long-term considerations for a succession plan?
You will find that more time will also allow you a clearer vision of how you wish to see the company run after you exit your role. You’ll be able to identify your objectives and goals for both the business and your family members as they continue your business legacy. These can include things like:
Milestones you would like your business to achieve
Roles and company structure for your family after you retire
What role you will play after retirement if any
Develop a timeline to exit your business
How do I get started?
Developing your business succession plan is more than simply naming someone to specified roles. You need to consider the family balance as well as what it takes to drive business success.
Navigating these dynamics takes planning and a strategy for execution.
Start by identifying your business goals – Having business goals in place allows your successors to work towards something meaningful and stay on track with your business objectives after you retire.
Appoint successors according to skillset - Everyone has a unique set of skills, so when you choose your successors for your business, make sure they are the right fit for the role. Luckily, when working with family, you will have the opportunity to groom them for their roles to ensure they are able to put their best foot forward!
Put the succession plan in writing – Putting pen to paper helps solidify and clarify the plan for everyone involved. By creating a written business succession plan, you lay the groundwork for an easier transition upon your retirement.
Speak with an advisor – Having an outside opinion can shed perspective on areas of your plan you may not have considered. In fact, it is often easier to create a well-rounded plan with the help of a financial advisor, to ensure your business and your family are all fairly represented, and you are all able to best achieve your goals.
Download 10 Tips to Maximize Blue-Collar Wealth guidebook for more information. Start developing your succession plan with an advisor that knows the in’s and out’s of owning a business. Darryl Smith works closely with his clients to find solutions that work for your business specifically so you can ensure it’s continued success and enter into retirement with the financial freedom you deserve. With innovative solutions, you can make your retirement the pinnacle of your work, money, and life!
Call Synergy Life Financial today at (705) 434-0562 and let’s start on a plan that ensures longevity and the success of your family business for years to come!