Business Succession Planning | Shah & Associates, P.C. Estate Planning & Elder Law Blog - Part 2
Website Home Contact Us Blog Archives Blog Home

Interesting Image
 
 
 

Would you like more information on:

 
 
 
Schedule a Phone Call
to discuss your planning needs!
Click to Schedule an Appointment







Website Home


Topics



Archives


Contact Information

Forsgate Commons
241 Forsgate Drive
Monroe, NJ 08831
PH: (732)521-WILL (9455)
FX: (732)521-1204
Info@LawEsq.net
www.LawEsq.net






Business Succession Planning Can Support Your Employees, Too

August 29, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

There are many different reasons to approach the subject of business succession planning. It gives you greater peace of mind and clarity about the future and can make things easier for family members who may need to become involved after you depart the business suddenly. Unfortunately, however, business succession planning is essential for your employees as well.

If staff members do not feel as though they are being valued in the company or being prepared to take on a bigger role when the transition time comes, they may begin to look for other opportunities. This can be a critical sign that business succession planning is necessary. A continuity plan is valuable for clients but also for employee motivation and retention. Effective business succession planning is about a multi-pronged approach.

Hiring loyal and talented employees from the outset can be essential, but an entrepreneur is responsible for treating these employees right and making them feel a valued member of the team. They should also be included in training and incentive programs that help to support their growth to higher and higher roles. If an employee feels as though there is no growth opportunity, then they may consider searching out other employment options. This can be devastating when a business owner who must suddenly depart the business has a choice only of inexperienced employees currently on the payroll because older and more experienced employees have chosen to depart due to lack of appreciation. If you are ready to initiate the succession planning process, reach out to a New Jersey business succession planning attorney today.

 

Succession Planning and Trusts in Estate Can Help a Business Survive After the Loss of a Loved One

August 3, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

You might not initially think that you have much in common with the Prince estate, but as a business owner you have more than you likely realize. Prince left behind no will or no plan, meaning that he created a lot of legal questions for his multi-million-dollar legacy and empire. Putting together a business succession plan is essential, if you intend to protect your business interests after you pass away.

business

In some families, for example, only one child wishes to be involved in the future business. With no estate plan, all of the children may automatically receive an interest in the business that they are not necessarily interested in. With the trust, however, the individual who has the business has the opportunity to funnel this business to the interested child. This is usually the child who has already working in the business. That inheritance can be offset to other children with other assets. Cash and a house may be some of the most common assets, but this allows the business to pass on to an invested child who wants to remain involved for many years to come.

The probate process can be lengthy and the sudden departure of a key individual in a business can present many unique legal challenges and problems. It can be difficult to identify a successor if this process has not already been done with the business succession plan. Make things easier for your business and your loved ones by consulting with a business succession planning attorney as soon as possible.

Checklist of Questions That Every Business Owner Needs to Ask

July 5, 2016

Filed under: Asset Protection Planning,Business Succession Planning — Neel Shah @ 9:15 am

There are several different questions that you need to ask in order to ensure that you have protected yourself against risks and engaged in proper planning. shutterstock_189579146

Do All Owners of the Business Have an Updated Buy-Sell Agreement?

A buy-sell agreement determines what happens to ownership interests and the business if they need to be transferred due to a disability, termination of employment or owner’s death.

Have You Reviewed Your Legal Structure at Least On an Annual Basis?

Whether you’ve been in business for awhile or whether you’re new to the game,] make sure that your business structure is always set up in the most advantageous manner.

Has a Succession Plan Been Outlined?

You need to ensure that the ownership and authority have been outlined when a business owner transitions and it is passed on to someone else.

Is There an Emergency Management Transition Plan/Procedure in Place?

Make sure you have a plan in the event that a key individual suddenly becomes incapacitated, unavailable or deceased.

Does Your Business Have Regular Shareholder’s Meetings and Annual Directors Meeting?

You should always schedule these in order to update the stock book and corporate minute book.

Do You Have Updated Contract Forms that Have the Clear Business Terms and Conditions

These forms should have clear terms and conditions aligned with protecting your business.

Have You Reviewed Any Potential Liabilities, Litigation Risks and Obligations?

The business should have a plan to guard against exposure, but you should also make sure that individual owners also have their own personal asset protection plans.

Do You Have an Employee Handbook?

Your employee handbook should include key terms about disabled employee rights, family medical leave, law changes involving discrimination, social media and sexual harassment.

When Hiring Employees, Do You Have Them Sign Noncompete Agreements, Non-Disclosure Agreements & Confidentiality Agreements?

This can be an excellent way to protect the business you have worked so hard to build and to lay ground rules from the outset of working with a new employee.

Is a Business Executive Compensation Plan in Place?

One of the best ways to reward loyalty is to ensure that you have rewarded retaining key employees and enhancing their commitment to your company.

Are Business Owners Thinking About Growth?

Are you thinking about acquiring other companies and growing your company in this manner?

Are you Thinking About Selling the Business to Someone Else?

If you are thinking about ultimately selling the business, or if you have received increase from someone interested in purchasing the business, there are many different things you need to prepare for.

Have Any Owners of the Business Expressed a Desire to Leave or Separate?

This is one more reason why you need a business succession plan in place.

Do Business Owners Also Have Ownership in real Estate Where the Business is Located?

Make sure that you have reviewed the recent developments and changes in the law and ensure that the legal structure of real estate ownership has been analyzed recently.

Have You Developed an Asset Protection Plan to Minimize Your Exposure to Liabilities?   

Make sure your plan covers all potential liability exposure. You can discuss this further with your New Jersey asset protection protection planning attorney.

 

Planning for Business Succession and What You Need to Know About Sales

June 21, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

Any number of major companies can illustrate the importance of business succession planning. Succession planning issues always make for interesting news subjects especially when they involved major companies like Disney, General Electric or Berkshire Hathaway. Although Disney had what they thought was a clear plan in place to replace their CEO, the individual intended to replace Bob Iger announced suddenly that he was leaving the company as well. NJ business succession planning

It looks like from the perspective of analysts that Disney may need to extend the contract with the current CEO while they look for an appropriate successor. and of course, it comes as no shock to anyone that the company’s stock value took a drop this last week. Succession planning is just as important for smaller and family owned companies as it is for these major companies. Whether you plan to transfer your business to a family member or an outsider, it will more than likely involve some kind of formal transaction. Research shows that 34% of business owner respondents, in fact, have received a formal offer for their business but 88% of these decided not to sell saying that it simply wasn’t the right time.

Among business owners who had not yet received an offer, according to an RSM Middle Market Leadership Council survey, 22% believed that they were likely to sell in the future, raising the question about how they would transfer ownership if they did follow on this track. There are several different questions you need to think of when conducting your business succession planning. These include:

  • Will you, the owner, have sufficient income or assets outside the business entity if you pass on to a family member?
  • Will you be able to achieve your necessary retirement and estate planning needs if you sell to an independent buyer?
  • What role would you like to play in the business after it is sold, if any?
  • What after-tax proceeds do you need to count on to meet your charitable estate planning, lifestyle, and other goals?

Meeting with a New Jersey estate planning attorney can help you accomplish these goals and more.   Contact us today to learn how our attorneys can help. Set up your meeting by emailing info@lawesq.net.

 

How Business Succession Planning Can Help with Smooth Transitions

June 15, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

It’s imperative to think carefully about replacing any high-level employee in your business, but this is especially important as it relates to a CEO. There are major risks associated with not having a long-term strategic plan for replacing someone at the head of the company. Succession planning should be discussed early although many companies fail to accomplish this goal until they have learned the value of doing so by speaking with a business succession attorney or until the company has gone through a rough transition period.

Take a lesson from the spice company, McCormick. They use many of the same tools that other companies do, including job rotations, a long-term strategic view and regular assessments for all senior executives. This is largely due to the fact that the sudden death of a prior CEO and health issues that forced the current CEO’s departure from the company.

Planning for succession is as much about deciding the future direction of the company as it is figuring out what plans and people you have in place to direct that transition with minimal negative impact on the company. With training and advance preparation, the next generation of leadership in the company should rise to the occasion.business idea

According to a recent study conducted by the Wall Street Journal, 55% of companies felt that they were only somewhat or not at all prepared for the departure of a CEO as a result of an emergency. All too often, boards of directors don’t consider replacing a CEO until a year or two before the individual currently in the role is planning to leave, but at that point in time it’s too late to develop someone else to take over the role. It is imperative to plan ahead for a smooth transition in order to allow the best possible chance of success.

Ready to talk succession planning? Contact our office at info@lawesq.net to learn more about your options and suggested next steps.

                                                                                                                                                                                           

Boosting Your Company’s Value with Business Succession Planning

June 7, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

One of the most common myths about business succession planning is that all you need is a buy-sell agreement. There’s no doubt that a buy-sell agreement may be an important component of your overall strategy, but it’s unlikely to be the only piece.

There are plenty of reasons to have a business succession plan in place as soon as possible, including:

  • Avoiding lack of continuity to impact clients
  • Having a clear vision about how the company can be sold or divided in the event of a sudden crisis
  • Protecting an owner’s equity
  • Preparing the next generation of leaders to step up to the plate

Your succession plan should be comprehensive and it should be a living plan. It’s not enough to have a basic idea about how things should happen in the event that an owner unexpectedly or even willingly departs the company. The best-laid business succession plans also have a systematic expectation regarding how ownership will be transferred. This includes a backup plan if the initial strategy is, for some reason, unachievable. business succession planning NJ

 

One benefit of succession planning that many owners don’t fully realize is that it can be used to lower risk to allow growth, ultimately boosting the company’s value. One key issue that can be difficult to calculate for the valuation of any business is known as the company’s “goodwill.” The extent to which this can be transferred to future owners will significantly impact the value of the company. If you approach succession planning with the right frame of mind, this should include transferring top clients to the succession team so that client confidence can be maintained.

 

In order to get the most out of succession planning, it should be completed as soon as possible and be something that leaders return to over time if circumstances change. To get started today, contact an experienced New Jersey business succession planning attorney.

What Mark Zuckerberg Can Teach About Business Succession Planning

June 1, 2016

Filed under: Business Planning,Business Succession Planning — Neel Shah @ 9:15 am

The business succession planning strategy of Mark Zuckerberg could have important ramifications for individuals who are approaching retirement and thinking about whether or not it is time to move on. business succession planning NJ

For example, Sumner Redstone, a multi-billionaire, is currently locked in an argument with trustees and his family over the control of his companies, Viacom and CBS. One of the key takeaways that Sumner and other individuals approaching retirement without a business succession plan can learn from Mark Zuckerberg is that there are key generational differences in the way that entrepreneurs build their companies.

In all situations, it’s in your best interests to avoid winding up in Redstone’s situation. You might assume that exiting the business is so far in the future that you don’t need to worry about it, but this is a mistake. In fact, there are many reasons that you may wish to exit or sell the business outside of death of an owner, and planning ahead for these can make for a smoother transition when the time comes.

A new survey from U.S. Trust found that younger business owners are planning to exit their companies and raising money in ways that are quite different from older generations even though many of their key concerns about eliminating or moving on from their role in the business are the same across generations. The younger generation deals with succession planning in very different ways.

Although two-thirds of current business owners do not have a formal exit strategy, and for the baby boomer population only 52% of younger business owners do not have an exit strategy in place. To learn more about how a business succession plan can help you accomplish goals for your company as well as determine when it time to move on in the future, consult with a New Jersey business succession planning attorney today.

 

Take This Business Succession Planning Quiz to Learn Whether or Not You Are Prepared for the Future

May 25, 2016

Filed under: Business Planning,Business Succession Planning — Neel Shah @ 9:15 am

business succession planning NJUnfortunately, far too many individuals avoid the process of business succession planning, figuring that they will deal with it at some point in the future. Unfortunately, as many business owners can attest, there are numerous reasons why someone may need to depart a business suddenly. These include disability, death, retirement and other issues. Without having an appropriate business succession plan in place, the business may continue to struggle significantly.

Answer these questions below to learn whether or not your company is appropriately prepared for business succession planning. If you find yourself answering no to the majority of these questions, realize that you are not alone and that you could benefit from a meeting with a business succession planning attorney. Getting things organized now and initiating these processes can help your business significantly and give you a great deal of peace of mind about the future.

  • Do you already have an identified successor for all of the key roles in your business?
  • Have you defined the vision and the personal goals you have associated with transferring management and ownership of the company?
  • Are there any family issues that could impede potential ownership and leadership decisions?
  • Does your business succession plan also take into account key estate planning issues such as minimizing estate taxes?
  • Do you have appropriate liquidity in the business in order to avoid a forced sale?
  • Is there a contingency plan in case an existing business owner becomes unable to work sooner than anticipated?
  • Is a buy-sell agreement already developed for transferring assets?
  • Have you figured out yet whether or not you or any other individual is depending on the sale of the business to meet cash flow needs in retirement?
  • Have you already had a business valuation conducted and viewed your company in the same way that a potential buyer would?

If you have not engaged in this process yet, it is not too late. Consult with a business succession planning attorney to learn more.

 

Why Do You Need to Think About Small Business Succession Planning Now?

May 19, 2016

Filed under: Business Planning,Business Succession Planning — Neel Shah @ 9:15 am

Did you know that just over half of all small business owners are aged 50 or above? That’s according to statistics from the U.S. Small Business Administration. How that breaks down to actual numbers is that 28 million individuals who own a small business are at the point of considering transitioning out of their business.business succession planning NJ

Despite the fact that many small business owners are over age 50, a vast majority of them have not completed the business succession planning process. A whopping 78% of small business owners plan to sell their businesses in order to fund their retirements, but less than one-third of them have an actual written succession plan which could be a recipe for disaster. Individuals who are counting on the sale of the business to fund their retirement completely could find themselves shocked if they have not planned ahead properly. Individuals may be forced to settle the business before it has been properly evaluated by somebody else and it could mean selling the business for less than what it is worth. These are just a handful of the reasons why you need to consider a business succession plan now.

One of the biggest reasons to consider business succession planning now is that you should not count on any traditional plans unless you’ve had the opportunity to talk them over with your loved ones. For example, if you believe that your children are going to take over the business, you should never assume this until you’ve had the opportunity to speak with him directly.

A vast majority of small business owners plan to pass the business down through the family but if there is no one interested or talented enough to take on these key management roles, you could find yourself struggling to find an ideal partner when it is time to plan the transition the business quickly. You should have these conversations early in order to tap ideal individuals well in advance since you may need to develop some of the talent within the company, knowing in advance how you plan to pass it on can help you implement training opportunities now. There has never been a better time than now for business succession planning, both for protecting your family and your company’s future.

3 Big Myths About Succession Planning

May 11, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

We’ve already impressed the general importance of business succession planning in numerous blogs, but many people never get to the point of actually accomplishing it because they are falling for one of these three common myths. shutterstock_228635452

Myth #1: A Successor is Automatically Ready When I Am

Without having this conversation with a successor, you cannot know for sure whether or not a successor is ready to take things over. Careful planning and an initial conversation are both important.

Myth #2: It’s Easier if We Just Plan to Sell

Selling your business is certainly one option for business succession planning, but it should not be the only one you consider. You should never make a decision about the future of your business without first discussing it with key stakeholders and your business succession attorney.

Myth #3: We Have Plenty of Time

This is probably the most damaging myth out there, but it’s also the most common one. Far too many businesses fall into the trap of assuming they’ve got plenty of time in which to finalize their succession plan. The reality is that sudden exits can happen at any time and that your planning should be done long before an incident like this arises.

To learn more about how to approach or update your business succession plan, contact an attorney today.

How Can a Cross-Purchase Agreement Benefit Your Business Succession Plan?

May 2, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

There are many different methods for supporting your business succession plan, or the plan in which you discuss how the ownership of the business will be transferred or methods for determining the business’s value and individuals who will take it over.shutterstock_107855351

A cross-purchase agreement is one such option. These agreements are structured so that every partner purchases and owns a policy on the other partners. This means that every single partner is an owner and a beneficiary on the same policy, with the other partner being the insured individual. When one partner passes away, the face value of each policy on the deceased partner is thus paid out to the remaining partners.

Those individuals then use the proceeds from the policy to purchase the deceased partner’s share of the business at a previously agreed on price. This is just one method for complimenting your business succession plan and it is one that should only be discussed with an experienced New Jersey business succession planning attorney. These vehicles can accomplish your goals but they can be relatively complex and easily misunderstood if you do not work with the appropriate attorney.

 

                                                                                                                

Who Needs to Be Involved in the Business Succession Planning Process?

April 28, 2016

Filed under: Business Planning,Business Succession Planning — Neel Shah @ 9:15 am

Aside from you and any key stakeholders with your company, you may also need to engage with a financial advisor, a business succession expert and a business succession planning attorney. This is because there are many different questions that can arise during the process of determining the right course for your business. shutterstock_290148488

The succession planning team should almost always include the owner’s family, the owner’s advisors, and leadership and management team. This is so that you can have questions answered quickly and determine what individuals will play specific roles in the process of transitioning the business in the future. Do not hesitate to reach out to an experienced business succession planning attorney as soon as you believe that you are prepared to complete this process.

There are numerous questions that need to be answered before you consider putting together your business succession plan and you should also conduct a review of any existing documents such as a buy-selll agreement. These documents can help to dictate what will happen in your business succession planning and give you a firm grounding for where you go from here. Consulting with an attorney and your advisors allows you to accomplish the meaningful goal of business succession planning.

What You Should Know About Family Business Succession Planning

April 22, 2016

Filed under: Business Planning,Business Succession Planning — Neel Shah @ 9:15 am

Unfortunately, the majority of family business leaders do not engage in the process of business succession planning. Even if they do engage in it, they might not do it properly or they wait until it’s too late to achieve maximum impact.shutterstock_321333917

The average longevity of a CEO in a non-family business is six years, but CEOs in family-owned businesses usually stay for 20 to 25 years. What follows are several tips for succession planning. It’s important to remember that succession planning can occur at numerous levels throughout the organization and it is important to think at least about the top 5 to 8 positions to put into your written succession plan. Keep these points in mind.

  • Think outside of seniority
  • Use a professional process of regular performance assessment, skill evaluations, and reviews of career history
  • Rank possible successors based on key criteria like learning agility, past work experience, past performance ratings, the ability to take risks, decision-making ability, prior leadership positions, education and problem-solving ability.
  • Prepare the next generation with comprehensive planning
  • Consider a leader outside of the family

Although this process can be difficult for any family business, it can be made much easier by consulting with a New Jersey business succession planning attorney.

 

 

Tips for Passing the Torch: Three Goals for Business Succession Planning

April 8, 2016

Filed under: Business Planning,Business Succession Planning — Neel Shah @ 9:15 am

There are several different things that your company can do to make the process of business succession planning that much easier.shutterstock_4720285

Putting together your plan once is not enough as you must be able to revisit this on a regular basis and make potential changes as you see fit.  It’s much easier to craft a plan and make small changes as you go rather than having the entire company try to adapt in the event of a sudden owner departure.

Having a long term strategy will make transitions easier when a key individual does depart from the company. Follow these tips to achieve maximum success with business succession planning.

  1. Track potential successors. Use survey feedback to identify potential leaders who could serve the company in the future. Make sure you identify who has what in the form of critical competencies attributes and skills.
  2. Communicate with potential candidates. You should never promise them a position necessarily, but you can give them an idea that you are considering them for a future role. This gives them the opportunity to get the most out of training.
  3. Have an emergency plan. This should be a disciplined step by step approach for training successors quickly and immediately in the event that a business owner is no longer able to do this.

What Veteran Business Owners Should Know About Succession Planning

March 10, 2016

Filed under: Business Planning,Business Succession Planning — Neel Shah @ 9:15 am

Research from the Small Business Administration indicates that there are over 3.7 million small businesses owned by veterans across the country. These make up approximately 9% of U.S. companies overall. Entrepreneurs and veteran business owners certainly make important contributions to growth in the American economy as well as business creation, but they need to be aware of the challenges associated with ignoring their business succession planning.shutterstock_172218401

In a recent national study, veteran business owners indicated that they were more likely to say they were in the process of winding down their business than the general population. This could be due to the fact that the majority of veteran business owners tend to be older than individuals in the general population and therefore more likely to be thinking about retirement or other life changes that would encourage the close of a business. There are several important things you can do in this process.

  • Start planning
  • Identify your transition options
  • Prepare for a comprehensive business evaluation

Going through each of these stages can be especially helpful for protecting your interests and ensuring that you are adequately prepared for moving on from your business.

Four Critical Tips for Small Business Succession Planning

March 1, 2016

Filed under: Business Planning,Business Succession Planning — Neel Shah @ 9:15 am

When you have put a lot of energy, resources and time into building your small business from the ground up, you might like to imagine that you’ll continue running it for the rest of time. Deep down, however, you understand that this is unrealistic. This is why you need to consider business succession planning now. Whether you intend to pass the business on to a family member or to sell your company, you need a succession plan. This helps to contribute to the long-term business viability. It also increases the chances that you will have sufficient funds in retirement to support you as well as to continue the business that you have fought so hard to build. The longer that you wait to conduct your succession planning the harder it will be to take action. Here are the four most important steps for getting started. shutterstock_164213294

  1. Involve your family. No matter what vision of the future you hold, you need to think about your relatives in terms of succession planning discussions. Are there any individuals already in place who may want to take over when you leave? You should also consider who is qualified to step in.
  2. Create an exit strategy in your business plan. More than likely you already have a business plan for the next couple of years. Your succession strategy and exit strategy should also be included in this plan.
  3. Put together your team of advisors. There will be several different people you need in the process of doing your business succession plan, such as an estate planning attorney, a business partner, succession planner, and an accountant. They can help guide you through the complex process of succession planning.
  4. Identify and prepare to train your successor. Once you are seriously contemplating what lies ahead for the future of your company, you will feel more inclined to help choose the right individual to take over after you leave. You need to carefully consider individuals who already have the qualities and begin to put in place a training program to prepare them for the future.

Time to Sell Your Tech Company? Keep These Tips in Mind

February 5, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

There are many different factors that can trigger the discussion about selling your much-loved tech company: nervous investors, sudden success, industry consolidation, or burned-out founders. As you may approach this point what seems like suddenly, it’s a good idea to carve out some time to carefully thing about the strategy and process.

Be Realistic About the Valuation

The value of bringing in an outside person to value the company cannot be overstated. You need to have these expectations set as early as possible so that there is no confusion or disappointment down the line. A lot of tech companies gave factors outside of financial metrics to consider. Some of the elements that should be considered in a valuation are the value of your existing team, valuation activity in the space in general, and the possibility associated with outsized demand.

Set the Stage for the Company

There’s no point in talking about a sale unless you’re crystal clear on your processing. Financial statements should be clear and recently-produced. All documents for hiring purposes should also be clear and filed, such as non-compete agreements and IP contracts. shutterstock_252909271

Evaluate Funding Options

There are a wide range of investors available to tech startups: venture capital, angels, accelerators, crowdsourcing, and the list goes on. These all have different requirements and goals, so make sure you factor this into your exist as well.

Got questions about succession planning? Contact our office at info@lawesq.net

Tech Company Top Succession Planning Tips

February 3, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

It’s not just tech companies that should pay attention to succession planning these days. In fact, increasing salary expectations, highly specialized skillsets, and lengthy searches for the ideal candidate are not isolated to the tech sector alone. With a major shift in demographics due to generational changes, a lot of companies are experiencing what’s known as a “leadership deficit”.

The good news is that with a little planning and foresight, leadership deficit doesn’t have to be a major challenge facing your tech company. shutterstock_331440044

 

First of all, don’t be afraid to break the mold when it comes to succession planning. Technology startup founders are usually the types to do it all, handling responsibilities like identifying additional markets, handling operations, leading development of strategy, and contributing to new technology. This means there are big shoes to fill when this person leaves.

Narrowing in on the skillsets you’ll need in the future, as opposed to those you used in the past, can help chart a better future for your company anyways. Beyond the start-up phase, it does not necessarily make sense to have a leader who handles everything. Keeping operational stability or attracting top talent, for example, may be more important qualities as the business evolves.

Succession planning is about more than who will replace the person at the top. Especially if the company ultimately goes public or is in a position to be acquired, management stability should be a common thread that goes throughout each of the units in the business.

Finally, don’t have a narrow scope for the pool of candidates. With the market the way it is, you should have multiple potential candidates to replace individuals in each position. This gives you some flexibility so that the unavailability of one candidate (or unrealistic salary expectations) don’t throw a wrench into your entire planning process.

Tips for Selecting a Successor to Your Business

January 25, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

 

In many cases your business successor could be selected by default. If you have a family business, for example, there is likely one member who is more qualified, interested and active in the business than others.shutterstock_158522279

In this situation the founder might have already spent a good deal of time grooming the successor for this situation. In this particular case, the challenge for business succession planning has to do with treating the other siblings or non-participating family members equitably. Able founders need to be prepared for how to pass along their precious creation to successors who have worked hard to take on the risks associated with it.

If succession has not already been determined by birth order, interest or proximity, it may require a group effort to select and groom an individual. Individuals who are not family members could even be recruited onto this transition team. It is unlikely to be successful if you opt to divide power between competing children because it can generate a great deal of conflict and impact the business negatively in terms of finances and management. Careful business succession planning requires thinking about where you have come from, where you are now and where you would like the business to go, and then evaluating various individuals who may fit into the roles associated with that business.

What Are The Pitfalls In Transferring Power In A Family Business?

January 20, 2016

Filed under: Business Succession Planning — Neel Shah @ 9:15 am

There are many different issues that affect a family business such as climate, laws, technology, economic trends, competitors and employees. But the family business is also influenced by anything that impacts the family unit itself like skill levels, various interests of the stakeholders, marital status, the level of business participation for each person and the relative health of all members.shutterstock_165121328

Handling transfer of power while balancing this climate can seem like a juggling act. This is especially true if the founder is hesitant to give up control or if the successor is not well prepared or interested in accepting it. The major issues facing a family business owner looking to transfer power to others are timing the transitions, selecting the appropriate successor, managing inter-generational conflict, providing adequate training for the successor, and ensuring a smooth transition period.

All of these can be important for the family business owner who is looking to pass on his or her company. Even if you are not planning to pass on the family business for several years, it’s a good idea to have your plans in place now in case a sudden disability or death were to alter them.

« Newer PostsOlder Posts »