If you own a family business

If you own a family business, planning succession is something you should begin sooner rather than later. The lack of a succession plan can have significant tax implications for members of your family, and subject your managers and employees to unnecessary risk. The sooner you plan succession for your family business, the more options you have to ensure everyone’s interests are protected

1. Involve all stakeholders in the planning process.
Your family, any other owners of your business, and your managers and employees all should be consulted as you plan succession.

Schedule several group meetings devoted to your succession plan, as well as individual meetings with key players.
Keep in mind that family members and managers will continue to play an active role in the family business, so allowing them to be actively involved in the succession plan can help smooth the transition and ensure your plan is accepted.
Draft a formal agenda for your meetings and make sure everyone stays on task. The focus should be on the succession plan, not any other problems or issues people have with some aspect of business operations or with each other.
2. Identify your own goals. You should have a good understanding of what you want for the business and how you define your values and your legacy.

You probably want to retire at some point, meaning you don’t want to continue to be actively involved in the company for the rest of your life.
Decide the general age at which you would like to step down, and the extent to which you will remain involved with the company after that point.
You also should analyze what kind of income you want during your retirement, and what your other sources of income are. That way you can come up with a reliable estimate of how much of your retirement income should come from the business.
Keep in mind that if one of your primary goals is keeping the business in the family and having it survive as your legacy to future generations, that goal forecloses some options such as selling or liquidating the company.
Once you’ve identified your key goals, write them up in a summary of a page or less that you can distribute to other owners, family members, and managers.

3.Consider the expectations of other stakeholders. The needs and goals of your family and your managers and employees, as well as any other owners of your business, should factor into your succession plan.

Written surveys can help you evaluate the needs and expectations of others involved in the business, and allow them to explore and consider succession issues in advance of a meeting.
Take notes at each meeting so you can accurately recall issues raised. Make copies of your notes available to everyone at the meeting so they can confirm their accuracy or correct any misunderstandings.
If there are other owners of your business, it is imperative that you meet with them often to get their input on the succession plan and also ensure that they understand how their rights and interests will be affected by the transition.
Understand the difference between individual goals and collective aspirations. While each person involved in the business has their own personal hopes and desires related to their own career path and professional growth, collectively your owners and management team should have goals for the business as a whole.