As we get older, we start to realize that money and success are not the keys to happiness. It comes time to pass on what we have learned to the next generation. Developing a succession plan for a business is a great example of this principle. We have collected 5 major suggestions for making this process lead to growth and improvement once you pass on.
1. Clearly Specify Mission – Heirs need to know what your core vision for the company is. If they do not know, they will tend to change it to fit their vision for the company, which may be foreign to what you wish it would be. Make your objective simple, but absolute. An example would be, “Henderson & Sons Will Strive to Always Offer 100% Money Back Guarantees to All Its Customers.” If your heirs know your expectation for quality, it is far more likely they will practice it, particularly if they are required to do so legally in the corporate structure to remain in charge.
2. Establish a Decision Making Process – Forbes recommends you identify who should govern the company as they transition it over to functioning after you are dead. Forbes says an established conflict resolution method can save a lot of headache that otherwise can cause your company to fail.
3. Have a Succession Plan – Know who is going to take your place as the manager of the company. If you want the company to retain your values, it is wise to choose someone that has the same values as the CEO. The same principle goes for the other positions in the company.
4. Create A Business Owner Estate Transition Plan – This will tell your heirs what to do when they die. It will help them copy what you are doing in passing the organization on to them. If you fail to do this step, your company will probably only last for one generation after you. Teach your children to teach their children etc.
5. Understand Organizational Psychology – If you plan to let your accountant son become CEO after you pass on, the company may later suffer from a lack of vision and growth, because the accountant is more concerned with risk and accuracy. Know who should be in charge, and do not let the popular guy dominate the organization.
The Fort Lauderdale Business Lawyers at Colodny Fass understand the complexities of creating a succession plan. Contact us today and let us create a viable plan for your family business today!