Will Your Family Enterprise Endure?
Will Your Family Enterprise Endure?
Will Your Family Enterprise Endure?
What will happen to your successful small business when you retire or in the unfortunate event of your death? Who will manage it, and will they measure up to the job? These are a few of the key questions that any serious small business owner should ask themselves at some point. Leaving your business to your son or daughter may seem like a natural choice.After all, a successful business can continue to produce wealth for future generations of your family. However, choosing an heir is not a task to be taken lightly. Savvy entrepreneurs engage in formal succession planning to legally protect their business assets and help ensure that the business continues to generate profits during and after the transition process.The most important thing you can do when succession planning is to start your planning early. There are several advantages to this. First, starting your planning years in advance allows you to identify the most qualified potential heirs and train them in the tasks and responsibilities they'll need in order to manage your business effectively.Simply leaving the business to the family member closest to you doesn't mean that person possesses critical skills like marketing or management. How early you should start planning depends on the nature and size of your business, along with the size of your pool of potential successors. However, many experts say that starting your succession planning a decade or more in advance is wise.Next, you should gather a team to help you plan the transition of the business from yourself to your heirs. This team should consist of your planned heirs or successors, key employees who will play important roles in the transition, estate planners or lawyers and small business consultants.A small business consultant can help you strategically plan your degree of involvement with the company after you retire. They can also help you develop financial or professional incentives to keep your most valuable employees on board after you leave. Also of critical importance during this stage is obtaining a formal evaluation of how much your company is worth. It would be best to consult a lawyer or estate planner to help you with this evaluation.When actually selecting someone to take over your business, consider the individual talents, skills, temperament and level of commitment of the person you have in mind. Remember that the success or failure of everything you have worked to build up in your business will rest on their shoulders. Allow them plenty of time to learn and prepare for the responsibility they will inherit. An ideal person will have several years working within the business and understand it from top to bottom.Examples of successful companies that began as family enterprises and have since remained within family control are Wal-Mart department stores, Hearst Corporation, and Mars, Incorporated. Each of these companies is an example of succession planning done right. If you start planning today, your company may one day join their ranks.
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