The family-owned business is often thought of as an American staple, the thing that forms the backbone of the economy. That said, there are many different businesses that people choose to start. They all operate much differently and those planning to pass their businesses on to their children need to plan accordingly.
For most people who start a family business, the dream is to have it stay in the family for generations to come. The founder may think of that as a gift to the family, giving them meaningful employment and an easy income. They may think of it as a stepping-stone, assuming that their children can build on what they started. When asked, about 88% of people who run family-owned businesses think that those businesses will stay in the family for at least five more years.
Does your child essentially think that your business has to go to them when you're done running it? Are they not just waiting in line but expecting that this is part of their birthright?
One way to transfer your family business to one of your children is simply to sell the company to them before you pass away. They take over ownership, and you don't have to worry about suddenly handing them the company at the end of your life.
Business succession planning gets complicated. If you leave a company to your children, are you making their career choices for them? What if they wanted to do something else with their lives?
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.
Business succession planning gets complicated when you have multiple children. Who wants to be involved? Who deserves it? What is best for your company? What is best for your family? These are just a few of the questions you have to ask yourself.
With your business, passing it down in the family has always been your plan. You built this for them. You want to do more than just provide for them when they're young. You want to give them a way to earn and find financial security for the rest of their lives.
When individuals are asked if they've drafted a will, they often say that they haven't because they don't want to plan for their death while trying to live. If you ask a business owner if they have plans for the future of their business, they'll likely tell you much the same. Your lack of planning for the future can cause your loved ones added stress and grief upon your passing if these issues aren't addressed.
You know that passing your business on to your kids is a serious matter. A lot of companies fail when they lose the influence of their founders and the children do not put in the same time and energy to sustain them. You do not want this to happen to your company, so you focus on training and teaching your children from a young age. You are grooming them to do your job someday.