Your family business was passed on to you by the previous generation, and your intention is to follow this trend. You’re reaching retirement age now and it’s time to think about the future. You aren’t always going to be physically able to cope with the strain of running a company full-time.
Over the years, you’ve floated the idea of passing the business on to your children, and they seem keen. However, being keen and being ready are completely separate things. How do you know if your children are ready to take over?
Have they handled large sums of money before?
You trust your children completely, but that doesn’t mean they cannot make mistakes. Every day, your business is dealing with transactions that involve large sums of money. It not only takes trust to handle this kind of situation but also competency. Are your children going to feel intimidated by sizable business deals? Or, do they have the composure to take it all in their stride?
Do they know what’s going on?
If your plan is to pass the family business on to the kids, then they need to know about it in advance. Make sure you have that conversation. One of your kids may have no interest, no passion and no time to get involved. Knowing this early on can save you a lot of hassle. You can instead pass larger shares onto the kids who want to get involved with the company and take it to the next level.
Are you taking the necessary transition steps?
Once you start easing your children into greater business responsibilities, you’re going to need to trust them to make their own decisions, and this includes making their own mistakes. At some point, you’re not going to be directly involved anymore but there is no reason why your kids cannot make it work if they have been prepared appropriately.
Succession planning is very important and it’s not something you should face alone. Legal guidance behind you at each step of the process can help protect your interests.