Potentially one of the most challenging tasks to face any leader, particularly one who has established a family business from scratch, is succession planning. With the potential to cause a lot of stress and confusion it’s vital to seek good financial advice early and solidify a lifestyle financial plan, to guarantee you are able to meet your long-term goals.
A good succession plan is the most important step in maintaining the strength of your business and ensuring your family’s prosperity for generations to come. Discussing the practicalities around how a family business should continue to operate beyond the career, or even the life, of the founder can be difficult and emotional, but is a crucial element of corporate financial planning.
For a family-run business, the transition of ownership is a once-in-a-lifetime decision, but while there is undoubtedly the potential to worry owners, there are also opportunities to highlight the special advantages that are unique to operating a family-run business.
LOOKING TO ENSURE THE SUSTAINABILITY OF YOUR BUSINESS AFTER YOUR EXIT?
Handing over a family business to the next generation is a major process, both emotionally and practically. It requires thoughtful selection and development of successors, protection of the brand reputation and retention of knowledge, to ensure the businesses long-term sustainability.
REMAINING A PROFITABLE BUSINESS
Careful financial planning can address any concerns while the current owner is still in control of the business. Daily operating costs involved in running a business can be examined, alongside the lifestyle and personal financial plans for the next generation of owners, to ensure that the current operating structure will still be appropriate and profitable in the future.
SECOND AND THIRD GENERATIONS
The nature of many businesses is that the first generation is entrepreneurial, creative and more concerned with getting the business going than planning how it will operate without them. This reflects in the fact that succession planning is often overlooked until the last minute. There is never too early a time to talk through the financial impact of handing over your business.
FAMILY-OWNED SMALL BUSINESSES
UK Small and Medium-sized Enterprises (SMEs) face many challenges, and family-owned small businesses can experience difficulty in navigating regulations and adapting their practices to changing policies.
CRUCIAL TO A STRESS-FREE RETIREMENT
Succession planning is a major concern for many family businesses – so much so that it’s not uncommon for a business owner to neglect his or her own financial plans, while being so caught up in those of the business and the family. Succession planning should be discussed alongside retirement planning, so that when the time comes, an owner is not just handing over their business, but is doing so with a firm plan in place for the next chapter of their life.
To speak to us about any financial concerns you have regarding your family run business, both immediate and in relation to succession planning, please get in touch.
This article does not constitute financial advice and should not be construed as such.