Importance Of Succession Planning In Family Business

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The company must be in compliance with all laws and best practices.

If not, you are simply passing problems to the next generation.

These opposed perceptions are due to a fundamental breakdown in communication.

The current owners of the business must communicate to the future leaders their exit plans and vision for the transition.

This gives the family member employee a broader and better perspective on how businesses run.

Consider having each family member learn jobs in every department of the company.If not out in the open, the assumed future leaders of the business will exit out of frustration that their day to lead may never come.ENSURE COMPLIANCE AND BEST PRACTICES Before you can transfer the company to the next generation you must have something of value to transfer.This assumes the older generation sees the need for the process and recognizes the time is right. This planning should start with the leaders of both generations (assuming these people are clearly recognized).Having a smaller group makes it easier to lead a process like this.If needed, and the company can afford it, an outside mediator should be considered to help this process.These meetings also allow each member of the family to relay expectations and concerns regarding the transition.To overcome this challenge, family businesses must engage in succession planning and recognize the special “people” aspect of this planning.While succession planning involves buy/sell agreements, estate planning, etc., it also involves taking into account the people and the family dynamic involved in transferring a business from one generation to the next. The following are some best practices the family business should not ignore.ENSURE THE NEXT GENERATION IS ADEQUATELY TRAINED TO LEAD Most family businesses put off succession planning because it can lead to family drama.If one family member is chosen to be the next CEO, this means others were rejected.

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