These tips will assist small business owners in creating a lasting business legacy, that will see their original idea flourish and expand in the decades to come.
Succession planning should be an exciting time for all business owners. With forward planning and a proactive approach - including the issues mentioned in this article - it can leave you financially satisfied personally, as well as ensure the ongoing longevity of the business that you've worked so hard to build.
No matter whether you are planning to eventually sell your business, pass management on to another staff or family member, or stay involved in some capacity - even if its not in a ‘hands on' day-to-day operational sense - having a succession plan in place is critical to success.
Successful business succession hinges on careful planning and it should be started as soon as possible in the life of a business.
There seem to be many aspects to succession planning - ownership succession, management succession, and internal succession - and this can be quite daunting for business owners.
Why the urgency for business owners to act now?
Many researchers have concluded that a staggering 90% percent of family businesses fail by the third generation. However, my own research reveals a glaring omission in almost every family business succession plan: Matters of the heart.
What an act to follow! Your father is Tom Watson, Henry Ford, John D. Rockefeller or George Bush. You may even share his name, but the life ahead of you seems fraught with peril. How can you possibly succeed?
Too often, a business owner comes to me with a problem of succession when it is too late. I am always aware of a refrain going through my mind - why did they wait so long? Why didn't they talk about these things before? Why did they let things go so far with such different sets of expectations in each of the major parties?
A family business founder is a tough act to follow. Mentors must prepare successors to bear the burdens associated with the role.
Family businesses extending to the third and fourth generation have always been rare but with high proportions of potential family business successors undertaking higher education, there is a crisis developing in the family business sector with regard to succession.
As a business owner, no matter what size or type of business you operate, you must have a succession plan in place for the inevitable day that you decide to transfer both the management and control of the business to someone else.
Ten points to assist you in planning your succession.
Succession planning initiatives for family businesses can be significantly impeded if the tax implications of the preferred courses of action are not taken into account by the owner.
Business owners usually have some sort of a business plan. They also frequently have key-person insurance in place. Some even have a succession plan in mind, even if they have not fully articulated it or have set up the business in a way that helps them achieve their plans. But even if business owners have all such risk management approaches in place, the chances are they still do not have a properly developed estate planning approach.
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