(NC) The transfer of a small business’s ownership between family members can be a tricky and emotional process if you’re not prepared for it. To help ease the transition, it’s important to start the conversation early and develop a succession plan well before the decision is made that it’s time for some other family member to take over the business.
What is succession planning?
A succession plan gives a clear outline of what should happen when you are ready to exit your business and transition it to be led by a new family member. By having a succession plan in place, it can help make the transition smoother for yourself, your family members and your employees.
Some tips for succession planning
Start planning early: These are complex processes which can take years to bring to fruition. All too often, business owners don’t start planning until late in the game. This can lead to confusion and headaches down the road. Start succession planning at least three to five years before your planned departure.
Seek professional advice: Many professionals are trained in different areas of business succession planning – including lawyers, accountants, business brokers, family business consultants and investment advisors – some or all of whom could be of help at different stages of your succession plan.
Think about the impact on your lifestyle: Family business owners can sometimes get caught up in the financial aspects of succession planning and may not think about what this change could mean for them personally. For example, you’ll need to answer questions like: Will you be involved in helping transition the business? What will you do with your time after your exit? How should you consider structuring your business so that it will be best for your family, employees and the business itself?
Succession planning in advance can make a difference
Many small business owners find it difficult to plan on how to hand their business over to a family member. But putting a plan in place can go a long way towards helping to minimize the stress for both the small business owner and the family members involved. Find more tips on successful succession planning at td.com/businessbanking.
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