All in the Family – Passing Down Business through Family
According to the Australian Bureau of Statistics, the number of active businesses has been on the growth. In this direction, about 2.1 million Aussies either operate or own a business, and, the statistics indicate that, from the total of companies, more than 70 percent account for family operated ventures.
Notwithstanding, just 20 percent of these institutions have a succession plan. In the meantime, less than a third of the businesses are passed down to the second generation, while 10-15 percent of them are transferred to the third generation.
Although the vast majority of business owners are overwhelmed with responsibilities and stress, putting off the creation of a business continuity plan can lead to a range of future complications.
In this regard, to facilitate continuity, creating a plan is a necessity for each family business, no exception. And this rule applies whether the family operates a franchise or a global enterprise. Consider the following steps to ensure the success of your company.
Passing Down Business
- Have formal family meetings
Even though you can talk with your family members whenever you want, it is highly recommended to have some formal meetings, with a structured agenda regarding your family company. At the same time, you might consider including an outside person to facilitate the meetings. That is your chance to encourage open communication.
- Make a plan
It’s also recommended to make a plan regarding the retirement of the older generation. By making appropriate retirement planning, the older generation will look forward to this new stage in their life. It’s quintessential for the two generations to support one another; otherwise, things may get easily complicated.
- Select a successor
The person who replaces the older generation has a range of essential responsibilities. Since it isn’t always appropriate or recommendable for the eldest son/daughter to take on the lead, the matter of succession should be openly discussed and debated. The person who is selected should be, undoubtedly, fitted for the position, and the decision shouldn’t be made for the wrong reasons. Otherwise, the success of the business will be jeopardized.
- Ask for professional advice for your business
It goes without saying that discussing the future of your company with a professional is highly recommended to ensure its successful outcome. Your solicitor will provide you with reliable assistance in drafting all the documents regarding the company and early retirement, as well.
- Put things into action
There’s no better time than the present to implement the continuity plan that you and your family have assembled.
- Be open to improvement
And lastly, bear in mind that it’s crucial to keep your eyes open to innovation and enhancement. A continuity plan may be changed or updated to ensure that the terms have remained relevant for the given context.