There are currently over 28 million small businesses in the United States, and that number is only going to get bigger. Over 543,000 small businesses open each month, and while a fair amount of those end up closing, a decent number will remain viable for years.
You will not want to be in charge forever, so as the years go on, you need to develop a business succession plan if you want the company to stay within the family. Financial advisors, attorneys and accountants can help tremendously during this transition period. However, there are various pointers to keep in mind to increase the likelihood of a successful succession.
1. Start planning early
If you want to pass a business onto your child, then you need to plan 10 years in advance from your retirement. The longer you spend working out all the fine details, the better off you will be. When you founded your business, you should have developed a business plan. Part of this plan should include your exit strategy. If you had the foresight to do that, then you will be on even better footing.
2. Be objective
You may want to pass the business onto your first-born child, but you need to be realistic. Perhaps this child lacks the mental fortitude to run the business and one of your younger children would be a better option. It can be tough to be critical of your kids, but when it comes to the well-being of your company, you need to look at every choice objectively.
3. Involve the family
You want to maintain an open dialogue throughout the succession process. Hear everyone's concerns and personal feelings. This is the best way to circumvent any family discord.
4. Train the successor
You should work with the planned successor for at least two years before handing over the reins entirely. By planning out the transition a decade in advance, this provides you with plenty of time for the actual training.