Do you own your own company, and are you trying to figure out how to pass it on to the children when you pass away? Business succession planning is very important on many levels — for the company, the employees and your family. Therefore, it’s crucial to do it properly.
One thing you need to consider is that your children may not be ready to jump in and run the company immediately. It takes time to get them ready and train them to do the job. Just because they work for the company, that does not mean they are prepared to take over.
One man had given both of his sons management positions, for example. They worked for him, and he said that he enjoyed having them be part of the business. However, he was careful never to promise them that they would own it someday. He left things open-ended and considered all of his options when the time came.
Naturally, one of those options was to phase them into a more senior role when he chose to retire. The trouble was that he did not think he had enough time to do it. He knew that rushing them into these roles would be bad for them and for the business. It could put the company and all of the employees in jeopardy.
In the end, he wound up splitting the stock up, selling some of it to his sons, some to other family members and the majority (51 percent) to the employees themselves.
Every case is unique, so it’s important to carefully consider all of your options when doing succession planning.