Most Family Businesses Do Not Survive the First Generation
To keep the family business going past the generation of the founders is a difficult task.
Almost 30% of family owned business never make it to the next generation, and of these less than 50% survive to the next succeeding generation. These are staggering statistics.
What Can You Do to Better the Odds That the Family Business Will Survive?
To better the odds of success for your family owned business you need to a good business succession plan. A good plan can bring financial stability to your family for generations to come. Do you know your great grandfather's name? If you do a good business succession plan, your great grandchildren will remember yours!
So What Do I Need To Do To Develop A Business Succession Plan?
Don't put off starting your plan. You will have a lot to consider initially. You have to look at your family dynamics, deal with your own mortality, review marital situations, and think of potential changes to all of this that could possibly occur in the future. If you do a quality plan, you will leave your family a trouble free succession for the business. Without one, you are going to leave them a big headache that may last for years.
Set Up Your Plan As a Process
A good plan should release control of the business over time to the next generation. Allowing the younger generation to learn the business and gain experience. However, the plan also has to deal with the possibility of your early death or illness.
Your Goal Is To Keep The Business Running For Generations
Your goal in this process is to keep the business running for the benefit of your family for years to come. To have a continued measured growth of the business. This is your legacy. Put the goals of the overall family and business above that of individual family members to accomplish this task. This will help you to determine who in the family will be the best leaders going forward. You will need to consider bringing in financial and legal advisors in this process. These advisors can be invaluable in assisting you through the years to set up and implement your plan. They will also be available to your succeeding generation to help with the transition. Especially, in the event of your untimely death or illness.
Integration Of Your Plan
A good family business succession plan does not only address management issues of the family business, but should be integrated with your estate plan, business plan, retirement plan, and tax plan. There are a lot of parts to this puzzle. You may have Wills, Trusts, Buy-Sell Agreements, Corporations, Limited Liability Companies, Partnerships, Gifting Issues, Life Insurance, and other items to integrate with your plan. This should all be discussed with your professional advisors. A quality succession plan will insure you do not become one of the statistics that did not make the next generation.
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