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Who is Next in Line for the Family Business?
Published on Oct 14, 2010
Read 'Who is Next in Line for the Family Business?' at 'Time to Start Up,' the small business blog by BizFilings.
Passing the torch of the family business from one generation to the next presents a management challenge. The owner must deal with business, family, tax and estate issues when planning for the succession of both management and ownership.
Any transition must preserve leadership continuity which calls for strategic planning. It's advisable for the two generations to sit down and define the mission and goals of the business as well as that of the family.
Sometimes the choice of successor is clear. Most family businesses will have one member of the next generation who is more active, qualified and interested in business than his or her siblings. Key employees who are not family members can often be recruited for a transition team. Involving key employees is a good way to retain them, and retaining them is essential for continuity and credibility in dealing with outside sources such as banks and suppliers.
In any case, a transition plan or timetable should be roughed out initially to assure continuity of management and should be reevaluated periodically to see if goals are being achieved. The transfer of power can be seamless and subtle if good communications and careful planning are practiced by all parties to the transition.
Much depends on the unique personalities involved and their past histories. But even the best of family and business situations can be brought low by lack of planning in this most delicate of transitions.
So plan early, revisit the plan often, and communicate at every turn so a great family asset can remain so well into the future.
Check out BizFilings for other helpful hints in managing your small business.