Succession planning for businesses of any size and ownership type is vital for long-term sustainability and success, yet is one of the toughest challenges businesses face. Only 30 percent of family or closely-held businesses survive into the second generation, and this failure is directly tied to a lack of family business succession planning.
Formally, succession planning entails three aspects: management, ownership and taxes. More specifically, first generation owners need to plan for who is going to run the business, who will own the business and how to keep taxes in check.
Here are 4 tips to get the succession planning process started for your family or closely-held business.
- Start early and involve family or other key personnel in discussions to define succession plan goals
- Identify and develop your successor over time
- Plan for favorable financial and tax terms -- get assistance from a professional to determine the best tax minimizing strategies for your succession plan
- Continually review and update your succession plan to reflect changes related to company value, market conditions or family dynamics--this is easily combined with your regular strategic planning process
In many cases, talk about succession planning is avoided because of personalities, family issues, differing opinions & expectations and because there is no single place for the family to turn to get all of their questions answered. Strategic Marketing Services, a division of the College of Business Administration's Business and Community Services, is ideally qualified to provide business succession planning assistance. The College of Business Administration houses faculty with expertise in finance, accounting, and management. The University also has faculty that specialize in the emotional aspects involved with families as they deal with aging, death, and the transfer of the family business from founder to children or other ownership.
SMS can leverage the intellectual capital of the University to provide succession planning assistance for your business. For more information, please contact Strategic Marketing Services.