Farrell, Hamilton & Julian, P.C.
618-208-0263

Do I need a succession plan for my family’s business?

Every family business should have a succession plan to help create business stability and prevent family infighting in times of change. Succession planning can foster a smooth leadership transition for the time you choose to retire from your business or are forced to step away due to health. However, it should be completed well before either of these events transpire.

If your business is to continue beyond your involvement, you will have to make sure you have a successor with all of the necessary skills to replace you. For that, you will need time to train and mentor this person before he or she can be expected to succeed in your place.

You will also need to make sure this successor is agreeable to other family members who will continue to be involved in the business. Intentional and thoughtful succession planning can prevent disputes among family members, just as much as it can prevent poorly qualified leadership.

First steps toward succession planning

Though succession planning may seem like a daunting task, it can be completed in stages. To start, you may consider facilitating collaboration between family members to create a common business vision. This will help direct the future of your business and help unify family members behind this vision.

Improving the strength of your family will also go a long way toward creating a smooth transition. Encourage family members to work through their differences and mend disagreements. In some cases, this can eliminate future obstacles.

Then you can build a plan for the future of your business. In this plan, try to address anything that could interrupt the flow of business.

What a succession plan includes

A recent Forbes article notes that your succession plan should address who will own the business, who will manage the business as an executive and who will serve on the governing board. A thoughtful succession plan should also map out a training program for your successor and other upcoming leaders to gain necessary skills, and it should specify the circumstances in which leadership transitions will occur.

The article also lists some common problems that are overlooked in poorly designed succession plans. These include neglecting to properly prepare successors for leadership roles, ignoring family discord and generational differences, and carelessly addressing how the business’s wealth transitions.

It can be tricky to navigate complex family dynamics while balancing the needs of your business, but that is exactly what succession planning for a family business will require. It will take thoughtful planning to develop a transition for your family’s business to continue to succeed beyond your leadership.

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