Family businesses are more than a job. They’re often a way of life. You want your loved ones to continue taking care of the company once you’re gone, but you also want the company to care for your family – and that can require planting the seeds of succession early.
Nearly 70% of the owners of family businesses in the U.S. want to pass on their work, but only 23% have a comprehensive plan in place. As you consider what lies in store for your life’s work, it becomes important to start thinking about how to pass things on to the next generation.
Your business may hold plenty of value, but it’s often in holdings and potential. Unlike simple assets like bank balances, you’ll need to come up with a blueprint for the complicated workings that make up a modern-day operation. The value of equipment, appreciation of real estate and handling of contracts might be a few of the crucial things to ponder.
There are more than a few pressing issues on the table when considering a plan:
- Aspirations: You’ll need to think about the direction you want the business heading. You aren’t required to keep things entirely in the family, and you may decide that it’s better to sell off parts and distribute the assets among your loved ones.
- Assignments: Keeping family members from fighting over the business may be a big ask. It’s best to determine who wants what responsibilities, who can handle certain tasks and who should continue to benefit from any profits.
- Assessment: Like many details surrounding business, there could be taxes to pay. From estate taxes to transfer limits, it’s essential to know what your intentions could mean for costs.
Understanding the hurdles you can face is one of the first steps in planning for succession. Make sure you’re ready for the process, and you can continue providing for your family for years to come.