A family business is something that goes far beyond a profit-generating venture. For you and your loved ones, it’s a source of pride and family connection. Which is why it’s important to make sure that proper succession planning has been incorporated in your long-term view of the company.
Did you know that there are three major reasons why family businesses fail? Two of them are directly related to how much forethought you put into the process of planning ahead. One is inadequate estate planning, which has ripple effects not just for your heirs but also for your company, and the other is lack of funds in place to pay estate taxes.
The third major issue affecting the future of a family business is the failure to properly prepare for the generational transition in the company, including who will take over key roles in the business.
While there are probably a lot of moving parts with your company and plenty of them that only you or your key employees are aware of, exit and estate planning might mean going outside of the office and getting the help of dedicated professionals.
This can mean working with an exit and succession planning professional, a CPA, a tax lawyer, and more. In most cases, your family business will have strong personal ties to your individual estate planning, and therefore all your tools should be created with both issues in the back of your mind. They must work together while you’re still part of the business and when you leave for maximum benefits.