Important Considerations for Choosing Your Successor
Family-owned businesses represent a significant portion of the American economy and are a proud tradition for many families. According to national estimates, family-owned companies comprise 90 percent of businesses nationwide and are responsible for more than 60 percent of the jobs in this country.
As a business law attorney, I have helped many business owners, and I am familiar with the challenges that family businesses face. Among the toughest is planning for the future of the business, especially across generational lines. Selecting the right family member to step in as the leader of the company can be very difficult, but with careful planning and decision-making, it can be done.
Planning for the Future
Choosing a successor to own and operate the family business is only one part of the equation. Before you decide who will take over, you must first develop a comprehensive plan for the future of the company. Depending on the current structure of your business, you may decide to do this on your own or you may need to sit down with certain family members to determine the best path forward.
If you decide to include potential successors in this conversation, their involvement and attitude toward the process can give you insight into their potential leadership qualities. Individuals who are passionate about the success of the business—not just those who are loud and dominating—may be well suited for management or ownership positions. Those who sit quietly without adding much to the discussion may have interests elsewhere and might not be the best choice as a successor.
One of the most difficult parts of choosing a successor involves bucking expectations. For example, when you opened your business, you may have imagined handing it down to your oldest child when he or she was ready. But, what if he or she has never shown signs of interest in taking over, or maybe, he or she lacks the necessary abilities to be a successful business owner? Is giving him or her a chance worth risking your company’s future? If not, you may need to consider one of your other children or a nephew or niece to keep the business in the family.
It is also important to keep in mind that a well-organized succession plan should not just simply hand over the reins of the company to a new person with no training all at once. Instead, your successor should be given the chance to grow into the role. You can facilitate this process by giving him or her increasingly more responsibilities starting immediately. If your chosen successor is already working in the company, he or she will need to make the transition into management, most likely, before being ready to take over day-to-day operations. You may also consider staying on in a supporting role once your successor takes over so that you can provide guidance and advice as needed.
Succession Assistance from an Illinois Business Lawyer
If you are looking toward the future and are unsure of what will happen to your family-owned business, contact an experienced Naperville business law attorney. At The Gierach Law Firm, we are equipped to help you develop a business succession plan designed to protect your company and your relationship with your family. Call 630-756-1160 for a confidential consultation today.