There are more than 15 million family businesses in the United States, ranging from

giants like Wrigley and Marriott to the local corner grocery store. Yet, history tells us

that less than one-third of family owned companies will make it to a second generation.

One reason for the disheartening statistic may be that business owners tend to forget

about succession planning. It’s often not a priority and it definitely can be an emotional

issue. Many owners just can’t imagine the business succeeding if they aren’t involved or

they may be too busy with day-to-day operations to take the time to adequately plan for

someone else to take the reigns when it’s time to step aside.

But as more and more baby boomers approach retirement age, the time for succession

planning is today. Tomorrow may bring a serious illness, disability or even death.

Having a well thought out plan is critical to the continuation of a business, particularly

for a small, family-run operation.

You may think the plan won’t be implemented for years, but unexpected factors

may move up the timeline.

some help along the way. Hiring the right professionals – attorneys, accountants,

financial advisors and business intermediaries – will help you ensure you have the

best possible succession plan when it is needed. Their expertise will be

invaluable as you develop and plan while continuing your every day tasks in

running the company. They will look more objectively at the business and the

goals you’ve set and help you ensure that everything is in place.

plan and simply announcing it to the family will only bring discontent when you

unveil the plan. You may come up with the same plan, but bringing the family

into the process will certainly create goodwill and support.

person you’ve selected to take over so he or she knows and understands what it

takes to run the business and keep it successful. Help your successor understand

the big picture in running the entire operation, not just the duties he or she is

currently handling.

financial plan together; management, ownership and taxes. As you work on your

succession plan, consider that management and ownership aren’t necessarily one

and the same. You may look to one family member for the management of the

company, but transfer ownership of the firm equally to several members of the

family.

part of the overall succession plan. You don’t want your heirs hit by heavy gift

taxes that they cannot bear. And no matter who takes over the business, be sure

the valuation of the firm is accurate.

daughter so they can follow in your footsteps. But it’s important to carefully

consider whether he or she is really the right person to take over the operations of

the company. Consider another family member, or someone else within the

company, if that person is the best qualified and has the business skills and desire

to run the firm. Ultimately, selling to an outside party may be the best option. A

business intermediary can guide you through that process, identifying potential

buyers and advising you on options for structuring a transaction.

The time for succession planning is now. Don’t delay starting the planning process. It is

one important way for you to ensure that you have the funds you will need in retirement,

while helping to ensure that your company will continue on after you leave.