For most family and small businesses, planning for succession is the toughest challenge they face. In some cases, a succession plan can be fraught with emotion as the owner seeks to preserve the legacy of the business and select future leadership. Also, the implications of those decisions can create turmoil in the minds of the people involved including management, staff, and family.
Alberta Business Sales will help to ready your business for sale and work in partnership with a succession planner to help to achieve business success.
Management Succession Planning – How will the business operate?
When we mention management succession planning, we’re not talking about who will own shares or assets in the future; we’re talking about who’s going to take on the countless day-to-day tasks that keep the family business running smoothly and ensure it remains an asset worth preserving.
Management succession planning requires focus on four key departments:
- Administration and Finance
- Operations and Customer Fulfillment
Ownership Succession Planning – Shares and voting structure
The current state of ownership succession planning among family businesses is decidedly mixed. About two-thirds of family business owners report a good understanding of the amount of estate taxes due upon their deaths, but about one in five have done no estate planning at all. Equally concerning is the fact that one in three junior generation family business members have no knowledge of their senior generation’s transfer plans..
The four ownership succession planning issues that are the most common areas of contention or omission in family business succession planning are
- technical mistakes,
- planning in a vacuum,
- leaving the business to the surviving spouse, and
- treating children equitably.
Addressing your ownership succession plan earlier rather than later will prevent future family feuds and get everyone on the same page to give clearer direction to the business in the present.