America is the land of opportunity, where family-run businesses can grow into large, global corporations or stay unique, small mom-and-pop shops serving the local community. Whether your business has been open for years or is just starting up, all your hard work can come crashing down if you do not have a strong succession plan.
As you work on your estate plans, remember to include what will happen to your business in the event of your death or incapacitation. Here are a few tips to get you started.
Train your successor
It is not enough just to choose the right person to take over the company. Transitions are challenging even under the best of circumstances. Even if you have a stellar successor, make sure the person goes through thorough training on all the ins and outs of running the show.
Do not wait until you are ready to retire. An emergency can happen at any time, so it best to be prepared to maintain the success of your business.
Your children may assume that just because they are family they will automatically gain control, receive assets and enjoy other privileges. Make it clear what roles they will play and what the requirements are for those roles. Talk with your children now about your plans so there are no surprises later that could lead to disputes.
Allow for change
On the other hand, ruling with an iron fist will not help either. Your children may have different visions for your company's future and methods for getting there, and their ideas are not necessarily bad just because they are different. Leave room for flexibility and leadership.
Get professional advice
Succession planning is not something to do on your own. You need to ensure it is comprehensive, clear and legally binding. Therefore, engage the services of business and legal professionals to ensure the best plan.