Do you ever wonder what will happen to your business when you retire? Well, it’s imperative to start laying a solid foundation for future generations early. It’s a fact that family-owned businesses contribute to over 50% of the global economy. With this in mind, it is wise to do all the right things to ensure that your legacy survives for generations to come. As an entrepreneur, you cannot afford to assume that your next generation will follow in your footsteps automatically. Sometimes, they are not professionally ready or experienced to steer the company in the right direction.
Your Succession planning should be focused on what’s best for your company rather than on individuals.
Possible successors to your business empire include;
Most business owners insist on having their immediate family members as their automatic successors. They believe in maintaining family control of the business for obvious reasons. They strongly advocate for all leadership voids to be filled by their children or spouses rather than entrust their businesses to outsiders. Prospective successors should be able to deal with all arising family discords amicably for the sake of the company. Every decision they make should be in the interest of the business rather than individual interests.
Some business pioneers or owners are open to handing over their companies to executives who are not family members. You’ve probably worked so hard to get your company where it is today. Therefore; the last thing you want is to hand over your business to unqualified, inexperienced and indecisive successors inside the family. Your designated executives must have the abilities to drive the company forward through good leadership, wise decision making, and resilience. They should also be able to come up with a value-adding strategy to effectively work with other key stakeholders including your family without unnecessary disagreements.
Board of governors
Other possible successors to your business include the governing board. All successful businesses depend on their governing bodies to run things smoothly. They are generally responsible for making major decisions without having to burden your family members with the headache of running the business. The beauty of governing boards is that they project their efforts towards the company’s core values, visions, and goals. They are the philanthropic arm that can help your legacy thrive even after you’re gone.
You can opt to designate your lawyer, accountants, or financial advisors among others as trustees in an event where your potential successors are below the age of 18 years. You should make every attempt to identify the right candidate to oversee things in your absence. Making this decision requires mutual trust to avoid uncertainties. Your trustees have no other obligation but to follow your directives to the core. He/she should be able to manage your business effectively before handing it over to your children when they are of age without complications.
Succession planning is a big elephant for most family-owned businesses. You have to ensure that your succession plan starts early for the sake of your business continuity in an event of the unforeseen. Of course, your succession planning will face numerous challenges such as family discords, executive preparations, and wealth transition issues among others but it’s accomplishable.