You have built an amazing family business. You may have started the business or inherited from your ancestors, but you always intended the family business to stay in the family. You have raised your children in the business, sent them to college with the goal of passing the business on to them, and taught them everything you know about the family business and the keys to its success. Then, your children tell you they do not want the business. As a matter of fact, they are going in different directions all together, choosing distinctly different careers or no careers at all. Now you are left holding the bag to determine what happens to your family business when you retire or pass away.
Extended Family
The first option many family members consider is bringing extended family into the business. Cousins, nieces, and nephews may be more than willing to keep the business in the family’s name, leaving you with a family business succession plan that may not have been your dream, but is still completely acceptable. Although you spent many years training your own children to take over the business, it is now time to begin to train other members of your family to step in and learn the ropes. Preparing them for all of the intricate details of what lies ahead will help ensure continued success for your business.
Out of the Family
Of course, there is always the possibility that the family does not want to partake in the business, there is not local extended family, or you do not want other members of your family continuing the business. As a result, you need to make a new succession plan that allows your business to close when you are ready to retire and/or you become too old to work the business any longer. This plan needs to include provisions for selling the business as a whole entity as well as selling it off in pieces or for inventory, especially if there is not a market for the full business. In addition, you must include provisions to cover the succession of the business in the event of your untimely death. The fact is, you are creating a succession plan that will keep the burden on you and your team of advisors, instead of your family, as they have made it clear they do not want to work in or own the business.
Ideally, this type of plan should be in place, along with the family succession plan, before you open your doors. Unfortunately, many family business owners do not heed this advice and only begin their plan with keeping the business in the family. Then, after the business has been in place for many years and the family does not want to take it over, the owners are left “holding the bag.” However, making preparations for selling your business as well as passing it on, allows you to operate your business to make it a worthwhile investment for a third-party buyer from the moment you open.
If you are in need of a succession plan for your family owned business that does and/or does not include family succession, contact the experts at Hubler for Business Families at (612) 375-0640.
Ideally, this type of plan should be in place, along with the family succession plan, before you open your doors. Unfortunately, many family business owners do not heed this advice and only begin their plan with keeping the business in the family. Then, after the business has been in place for many years and the family does not want to take it over, the owners are left “holding the bag.” However, making preparations for selling your business as well as passing it on, allows you to operate your business to make it a worthwhile investment for a third-party buyer from the moment you open.
If you are in need of a succession plan for your family owned business that does and/or does not include family succession, contact the experts at Hubler for Business Families at (612) 375-0640.
RSS Feed