Own a family business? Here are 7 tips on family business succession planning

Dealing with the succession of your family business can leave you feeling knackered.

In this blog post we’ll share 7 expert tips on successful succession planning for your family-owned business to ensure a smooth transition.

7 tips on family business succession planning

#1 Start planning early

Starting early reduces the risk of having to make urgent, poorly-thought-out decisions.

It also helps you consider all avenues and make the best succession plan along with multiple contingency plans.

Experts suggest integrating the family succession plan into the core business plans of fledgling businesses.

#2 Help your successors build skills

Involve your successors in your business activities. This will give you access to their ideas and let you observe their decision-making processes.

For them, this will open up opportunities to develop skills that are necessary for business owners to lead.

Also encourage your successors to take on employment opportunities at other companies to gain more external knowledge and experience.

#3 Create a space for mistakes and creativity

While it’s important to be involved in the succession of your business, it’s also crucial that you create a safe space for mistakes, creativity, and innovation.

Think about how easy it would be for your successors to gain experience and skills in company ownership if the environment around them was an understanding and open-minded one.

Creativity and the freedom to make mistakes can oftentimes lead to great innovations that bring you closer to your business goals and objectives.

#4 Make sure your successors are actually interested

A common oversight among many business owners that lead to major issues in the long run, is whether or not your successors are actually interested in having ownership of the company.

Start to build their interest at an early age by getting them involved in business matters and creating a positive impression of your business in their minds.

But remember that some of your family members will never develop an interest in being involved in the business. Respect their wishes.

#5 Discuss Finances early on

If you’re planning on handing the family business over to your successors as an inheritance, you’d have to deal with tax applications.

But if you’re selling your business to your successors make sure that the buyout agreement is thoroughly discussed with them and that they are satisfied with the terms and conditions.

Either way, these financial intricacies need to be discussed a long time before you actually have to transfer ownership.

For more professional estate planning help and guidance on your plan for succession you can also consult financial advisors.

#6 Use the benefit of time

Since you start creating a succession plan early on – possibly when your successors are still young – you have plenty of time to assess each successor’s strengths and weaknesses with careful and thorough consideration.

By taking your time to decide, you can also observe your successors as they grow and determine who qualifies best for the leadership role in the family business.

#7 Ask for help

Trying to do everything by yourself can hurt your wellbeing in the long run. And pursuing this approach arrogantly sets a bad example for your successors.

Asking for help when you need it, will show your successors that it’s important to rely on others and to delegate tasks to the right individuals.

Many business owners outsource their legal and financial business functions to more qualified professionals so they can focus on growing their business.

We have an Ebook on why you can’t afford not to outsource. Send us your email and we’ll forward it to you for FREE.

Outsourcing your accounting, bookkeeping, tax, and payroll tasks? We’ve got you covered.

Need help with your accounting, bookkeeping, tax, and payroll tasks?

With the expert guidance and skills of our chartered accountants, we can take care of your finances while you focus on growing your core business and nurturing your successors.

Drop a kia ora in the chat and we’ll take it from there!

Talk to us about how we can support you and your business.

No products in the cart.