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June 27, 2009

Here's Why The Most Important Area In Family Business Management Is Family Business Succession or Succession Planning

If you are the owner of a small family business some day you'll want to exit the business. You can stay on as long as you can, but eventually, you'll have to plan your exit.

Having made your decision to exit the business, your attention now focuses on executing your succession plan. You'll be faced with many options, these will include:

. Whether to find a successor who is not only experienced, but also an entrepreneur who shares your passion for the business and who can build the business to the next level

. Whether to sell the business to the existing employees (if they can raise the capital) or agree to merge the business with a competitor, or

. Whether to sell the business to the highest bidder who meets your asking price.

Succession planning also includes tax considerations. Here you are focused on mitigating not just your personal taxes but also business tax, in the form of capital gains tax.

Succession planning is not just confined to finding an experienced leader to fill your position, selling options and tax planning.

The following video on small business management goes into more detail on the issues to be addressed by owners of family businesses.

So there you have it!

There are four considerations to successfully managing a family business and succession planning:

1. Consult independent outsiders for their honest opinion

2. Create a family atmosphere that involves employees who are not family members: this can give you distinct advantage over competitors when it comes to employee relations, retention and motivation

3. Establish performance standard for all employees, especially family members

4. Don't treat all family members the same. Reward them based on their true contribution.

David
Small Business Resource

Posted by David at 5:26 PM | Comments (0)