Business succession planning determines how you are going to transfer the ownership of your business and transition out of a management role within your business, while at the same time maximizing your own financial security. The main reasons for business succession planning includes the prevention of business failure due to a poor management transition plan, ensuring you minimize risks to your retirement capital, coordination of your business plan with your estate plan, and proper planning and financial protection against an unforeseen event.
Business succession planning objectively looks at the suitability of family succession. While one or more children of your children show interest in your business, it is important they have the skills to run your business and have the desire to do so. When choosing family succession, timing the transition period should be carefully chosen. This entails you bringing your children into the business precisely at the right time. If you bring them in too early, they may lack the necessary experience; if you bring them in too late, they may develop other career opportunities outside your company they do not want to leave. With family succession, it is always best to transition your children into the business in a way that your departure coincides with the end of their training.
Since business succession planning is part of financial planning, it is always best to discuss your options with CRS Financial. We will provide you with objective professional advice and will help you sort through all the questions you may have about family succession. Before you contact us, be sure you are ready for family succession by having some of the following questions answered: what is your current family situation, are there different goals among family members, have you developed a clear vision for the future of your business, have you informed your business partners about your family succession plan, and have you objectively assessed your children’s capabilities?