Planning for your estate and planning for your business are one and the same. When you are a family business owner looking to pass the torch, the business is at once your greatest asset and likely the center of the family wellbeing – but in another important sense planning for a business is not at all the same.
Succession planning is unique because business is business, and so a successful succession is a careful one.
There are a great number of moving pieces to your business and to your family. Nevertheless, there are some basic guiding principles to help tie it all together. A recent article in The Business Journals offers “5 tips for a successful family succession.”
While you should consult the original article for the details, here are the “five tips”:
- Be Transparent
- Clarify Ownership Values
- Plan Ahead
- Consider Financial and Tax Ramifications
- Stay Connected
Essentially, respect the family as "family" and the business as "business." Family is here to stay and everyone has to come out on top, while the business requires leadership, sharp decision-making, and a business mindset. It pays dividends to work with the family and maintain transparency regarding your plans to make the “handoff” and their plans to receive.
Ownership is a big issue to clarify, since ownership and a voice in the company straddles that fine line between merely family-owner and head-honcho decision-maker. These may be roles some loved ones just are tailor-made to occupy ... and others, well, are not.
What are the issues that most directly affect you and your family? How can or will you work through them to pass on the business?
These are not simple questions by any stretch.
More to the point, succession is more a process of working out the solution than just offering up the plan. You might say succession is always a process unique to each family and family business, but one during which it is essential to have a steady hand guiding the process.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: The Business Journals (December 9, 2013) “5 tips for a successful family succession”