Family Business Succession.

Many family business owners agree that their business forms a large part of their retirement planning.
Yet, realising that wealth is a complicated and risky procedure.
Do you hope to sell it for enough capital to provide for your retirement?
Or do you wish to keep it in the family, thus securing your retirement income?

While the option of transferring your business within the family is attractive, 70% of family businesses do not survive the transition to a second generation! And even less make it to a third generation.
The close personal issues of family life often destroy all good intentions.
It's not an option for many businesses.

But if it is your intention to hand it over to a family member, you should start addressing some of the issues you will face ... NOW.

Just how?
You need to identify the issues that complicate family succession and plan accordingly.

Your Business is Not Child's Play.

It may be your wish to have one or more of your children follow in your footsteps.
But, if it appears that your children may never have the acumen to run the business - it is probably better to look outside of your family.

Perhaps a child has shown an interest in what you do. If so, a succession strategy may prove successful.
But again, if no child shows a business desire when they are of an age to start taking control of the business, it's extremely unlikely that they will somehow develop it later.

You may feel so strongly about succession that you choose to ignore the signs against it - but please let good business judgment prevail!
It's both your and your family's future at stake.
Maybe let a qualified third party have a share and allow them to run it along with your family.

Timing is Everything.

When considering succession, you need to have a solid plan in place.
Not only to clarify who does what, but also when they take control.
Start to early - when they are inexperienced - and you may destroy any confidence they have.
Delay too long and they may be frustrated and choose a career outside of your business.
A strategy based on the child's learning curve - designed to meet your target dates (like retirement) is vital.

Management Skills are the Key.

While you are running the business it may be fine to delegate responsibility, but retain the authority.
Your greatest challenge will be giving up that authority.
If you don't empower your successors, they will leave.
No one likes to manage if they cannot have the authority to back up their decisions.
Initially, you can guide them in decision making, but back them up on whatever they decide is best.
Difficult to do, but it does become more easy as they garner experience!

Don't Go It Alone.

There are many professionals who will help you choose the correct path to succession.
There are many resources to help you get knowledge you seek in making our plan.
Most of your advice should come from sources outside of the family. They can give objective and unbiased advice.
Your accountant or a Financial Life Planner (like myself) can assist.
Then, hire a specialised company to handle the actual transition; it will be the best decision you make.

Here are some concerns you need to answer;

• What is your present family situation?
  How old are you and do you have children in the business?
  What are their ages and experience?
• To what degree is your family involved in decision making?
  Do you make the decisions?
  Do you involve your family at all?
• What are your family member's business and personal goals in life?
  If they have different goals, how do your reach decisions?
  Through a family council?
  A board of directors (with outside members)?
  Hired professionals?
• How much thought have you given to succession planning?
• Have you done it alone or in consultation with peers or professionals?
• Do you have a clear short and long-term business plan?
• Have you a written succession plan?
  Have you advised important business partners, customers, suppliers, creditors and key staff members on it?
• Have you identified successors and key management people?
  What sort of training program have you designed to ensure they will be competent?
• Have you considered how you will help a successor gain credibility within your family and the business?
• How will you assist your successor to understand the rights and responsibilities that come with their position?
• Does your Will and Estate Plan clearly indicate your wishes?
• Have you considered how to equate your estate with family members who do not wish to be in the business?
• Do you have a contingency plan in the event of death, disability or failure of a successor?

Please call me if you feel you need to discuss your Succession Plan.

I work with a number of professionals who can assist you in most areas of concern.

After all, it's your future at stake.
Don't take a chance on losing all you have worked for and most importantly, jeopardising your ultimate goal - a comfortable, worry-free retirement!

If you would like to plan your FAMILY BUSINESS SUCCESSION, please contact me. Cell: 083 377 8894

Don't leave your concern here. Call me for advice - no obligation!

pyburn@peterpyburn.co.za

Especially if you are concerned about Business and Family Succession.