The Importance of Succession Planning
Succession planning for most family and closely held businesses is a tough process to go through. It involves facing change and transition and can be a challenge for an organization to face.
At the same time, succession planning can be a great opportunity to strengthen the company by discovering strategies for growth and uncover efficiencies that might not have been recognized otherwise.
According to the research, 88% of current family business owners think that their family will control the business in five years, but the statistics tell a different story.
Only about 30% of family businesses survive into the second generation, 12% into the third generation and only about 3% last into the fourth generation and beyond.
Research indicates that family business failures are basically a result of the lack of family business succession planning.
How We Can Help You with Succession Planning
Ownership Succession Planning
The issues in ownership succession planning that seem to create the biggest problems are:
- Technical Mistakes
- Planning without a context
- Leaving the business to the surviving spouse
- Wanting to treat all of their children fairly
Only about two-thirds of family business owners report a good understanding of the amount of estate taxes due upon their deaths, and only about one in five have done any estate planning. What is even more troubling is that very few of the next generation have any knowledge of their senior generation’s plans.
One of the beliefs that family business owners have to change is their understanding of how long the process takes. Owner succession planning includes trusted advisors, a knowledge of options, evaluation and identification of the next generation of leadership and the toughest task of all: realizing that their role will be changed forever.
We encourage Business Owners to begin the process long before the retirement years are looming. Not only will your business be stronger, but you’ll have peace of mind and sleep better.
Management Succession Planning
Planning for transitioning a business should also take into account the daily management of the business. Making sure that you have deep bench strength in the key areas of business – finance, operations, sales, marketing, customer fulfillment and administration – will help to create a smooth transition from one generation to the next. Particularly if you have identified the leadership team and can strengthen them during the planning phase.
Learn More about Succession Planning
We recognize that every business is different and every scenario is unique and so we offer you the opportunity to meet with us to discuss your situation and see if we can be of help to you. Fill in the Contact Us form or contact one of our Partners to get your planning started.