If you have a viable family business, you know how tricky it can be to plan for family involvement. It’s important to identify which family members could potentially get involved in the business as soon as possible. Once you’ve identified who might be interested, how should you proceed with your succession planning?
If there is interest:
1. Evaluate early. Start looking at the situation as soon as possible. Are there family members with a natural bent towards business? Which ones are asking questions and showing interest in the business?
2. Let them get involved. Allow interested children to start working for you (If they are minors, there are significant tax benefits to this as well). Consider placing them in different areas of the company to see what the best fit may be.
3. Don’t write them off. Even if they start somewhere else, heirs may maintain an interest in your company. Working for another business provides heirs with valuable experience. If they express an interest in the business, keep in mind that they may return to the company.
4. Plan ahead. Start planning the succession process as soon as possible. Make the process as clear as you can. If you plan to retire early, or if your children will be too young when you plan to retire, make sure that you keep the options open. The most important thing is to avoid putting off decision-making until the last minute.
If there isn’t interest:
1. Make sure they understand all the aspects of the business. If you own, say, a restaurant, make sure your children, especially if they are younger, understand the different roles that everyone at the company plays. It’s not owning a restaurant: it’s managing servers, it’s bookkeeping, it’s menu-planning, it’s marketing, etc… This is true for any business.
2. Don’t force the issue. As hard as it may be to accept, some heirs just won’t want to be involved. Make sure that you begin planning for this scenario early; don’t be surprised and have to make a hasty decision.