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Succession Planning for Your Family Business

A family business is your pride and joy. You and those who came before you have likely spent quite a bit of time, energy, and money to keep the business flourishing. One thing that your business may be lacking is a succession plan. Unfortunately, many family businesses do not have a succession plan in place. The good news is that you can implement a succession plan for your family business without too much stress with help from an experienced business attorney.

What is a Succession Plan?

A succession plan for a family business is a guideline that provides structure and instructions for how the business will continue following the death of one of the founding or main family members. The succession plan will give everyone a roadmap to follow that will eliminate chaos or disputes that could otherwise cause problems. The succession plan provides for how the business will transition from one family member to another. A succession plan is one part of a good governance structure. It will give you and your family peace of mind during this emotional transitional phase of your business.

Benefits of Succession Planning

Succession planning is a process that begins with communication between all involved family members and others in the business. It is essential to discuss your goals for the business both for the short-term and long-term. Establish a family council or board that will meet to discuss all aspects of the business, including a succession plan. The board ensures that the family understands the major areas of the business and creates an open line of communication. The succession plan will eliminate disagreements later and will make the transition process less stressful.

What to Include in a Succession Plan

A succession plan should include not only the way the family business will be run in the future, but also plans for the development of the skills the family members need in order to prepare for their future roles. Identify the roles that are needed, such as those who will make decisions, those who will manage operations, and those who will handle finances, for example. The plan should then further designate specific family members and what their roles will be as the business transitions. Everyone involved should understand their role so they can take the steps they need to prepare. You will also want to include what to do when an emergency situation arises.

Planning for the Future of Your Family Business

Your business may not continue to be successful unless you take the time now to prepare for succession. Open communication with family members will help prevent problems and will help to make sure that every family member has a role that is best for them and for the business. It is never easy to talk about what will happen down the road when a family leader passes away, yet it is a necessary part of business planning. The very existence of your business in the future could depend on creating a comprehensive succession plan today. To learn more about business and succession planning, contact our legal team today at Moen Sheehan Meyer, Ltd. at (608) 784-8310 or online.

Published December 4, 2023
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