Succession planning
For most business owners, the business is, in value terms, their largest single asset. It can represent a lifetime of personal endeavour, be a major source of pride and self esteem. When you look around the business you are running today, what is its future? Will what you have created or built or enhanced survive for another generation? Ask yourself, does it deserve to continue successfully into the future?
Research world-wide into the continuity of family owned businesses could be synopsised as the one-third rule. Approximately one-third of family owned businesses survive into the second generation and a further one-third (i.e. 11%) survive into the third generation. In effect, your grandchildren have a one-in-ten chance of succeeding to and successfully running the business you own today.
The reasons a business may not remain within family ownership can be summarised as either:
- There is no qualified successor, or
- Businesses that fail or are sold off due to lack of planning
In the first situation, even though the business may not pass to family members, steps can be taken to ensure that the value of your business survives for the benefit of family into the future. The second situation is often one of not knowing where to start or not wishing to deal with the personal and family issues involved. We have a specialist advisory unit to assist business owners facing the succession dilemma and have also recently produced a publication covering many of the issues involved, titled “Planning for Family Business Succession”.
Making sure your business has the future you would like it to have takes planning; it cannot be treated as an event you will get around to some day in the future. The process involves communication with other stakeholders, establishing a strategy, having a plan and executing the various constituent elements of your plan. No one size fits all and any succession process is a fluid one, as your requirements now may very well have changed in 10 years’ time. A myriad of issues can make the process surprisingly complex, from emotional family issues, business valuation, nurturing future management talent and tax planning; it takes a variety of experiences and perspectives to make succession work. For most people this means getting help from a team that has been there before. Only you will know your situation and your ultimate goals, but having the right support at what is a crucial time for your business is essential.
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In association with The Varsity Press |