I am thinking about retiring. Do I need a succession plan even though it’s a family-owned business that I’m leaving to my children?

A:

Every business owner should have a succession plan, no matter how small the company or whether the company will be left to family members. Many family-owned businesses fall apart after the business owner steps away or passes away because there is a lack of planning—making the transition period difficult for any successor.

For this reason, it is critical that, as a business owner, you start preparing a succession plan to make sure your family will be left with a successful business after you leave. Don’t put it off any longer—here are some tips to start your succession planning:

• Think about the plan realistically – although your first born seems like the appropriate choice to leave the business to, you need to take a step back to look at his business skills, determine if he is qualified to run the business, and make sure he is interested in taking over when you are gone. You can ask your child if he is interested and get him some training to build better skills. However, another child or family member may be more capable. If not, you can always consider selling the business. 
• Not everyone has to receive an equal share – it is generally best to choose a successor to run and manage the business. This person will receive a larger share of business ownership than other family members who are not active in running the company. 
• Talk about the plan with family – after making your succession plan, it is best to discuss it with family to avoid family conflicts later on, down the line. This way, you can inform them why you made the decisions you did.

For help with your business succession planning in Texas, call a skilled Austin business lawyer at the Posey Law Firm toll-free at 888-269-1962 or locally at 512-646-0828 to schedule a consultation.

Jake Posey [email protected]

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