Part of your dream of owning your own business was knowing it could support your family now and into the future. You knew then that you wanted a family member to take over when you retire or pass away.
Making a business part of your estate plan takes careful planning. When your loved ones inherit your business, it impacts a significant portion of their life and livelihood.
Here’s what you should consider if you want the next generation to take over your business.
Communication is key
To successfully transfer your business to a family member, you need to start the conversation early. Before you start talking to your loved ones about who will take over the family business, have a few ideas about who would be a good fit and which family members seem the most dedicated and interested.
Often, family members may see the owner’s role either as easier or more complicated than it is. Usually, the truth is somewhere in the middle. When you have a conversation with them, they need to know what they will need to do to succeed in your role.
Make a training plan
Getting your successor ready for their new role as the owner of the family business is vital. Depending on your estimated timeframe, you may want to consider options, such as:
- Shadowing employees in your company
- Taking classes or getting an industry-specific degree
- Shadowing you for a week or more
In some cases, seeing someone’s job for one day is not an accurate view of what their job entails. If your loved one is going to take over the business, they need to understand how the company should operate and what the options are if something goes wrong.
Be open to alternatives
Sometimes your loved ones will not be interested in taking over the family business. In this situation, it can feel like they do not appreciate your work to build security for them.
More likely, your loved ones cannot see themselves doing what you do. If your family is not interested in taking over the business, use the opportunity to watch for other members of the company who could be a good fit.