You’ve spent a lifetime building up your family business, growing the company and creating a lasting legacy for your nearest and dearest.
But all good things must come to an end, and at some point in the future you’ll need to hand the business over to the next generation.
What are the signs that it’s time to step down? And what’s the best time to put your succession plan into action and to pass the reins to your successor?
Stepping back from the business and starting a new life in retirement, or working on a new business idea, probably sounds enticing. But it’s important to have a clear succession plan in place and to pass on the business at the right time.
Here are five options for when the time is right to step back:
#1 When you, the founder are ready.
Your own readiness to step back from the day-to-day operations of the family business is a crucial factor. You need to feel ready to hand over control, be confident in your successor and have a clear understanding of your future role. Will you exit completely, or stay on as an adviser, or board member?
#2 When your successor is ready.
Your chosen successor also needs to be ready. It’s vital for your successor to have the necessary skills, experience and commitment to lead the business. They should also be prepared to take on the responsibilities and challenges of running a family business, through good times and bad.
#3 When the business is looking stable.
Change can be a challenge in any business, so it’s important to initiate this change of leadership when the company is looking strong and stable. This gives you the foundations for a successful transition. Make sure the business is in good financial health, has a strong customer base, and that your market position is looking favourable compared to your close competitors.
#4 When the timing and conditions are right.
Handing the business over during tough market conditions is not advisable. Evaluate external factors such as economic conditions, industry trends and family circumstances and think about whether now is a good time for the transition – or whether it’s better to wait and ride out the storm.
#5 When you have a clear succession plan in place.
A transition from one generation to the other is a complex and often challenging process. There’s real value to having a well-crafted succession plan in place. This plan will outline the transition process, roles and responsibilities, ownership structures and will ensure a smooth transfer of power.
Ending your own personal journey with your family business is a momentous step, and a transfer of power that will run far more smoothly with plenty of pre-planning.
Talk to our team to discuss your plans for the future, your hopes for the business and the key elements that should be included in your exit strategy and succession planning.
The team at EMspire Advisory are trusted, qualified Chartered Accountants, tax agents, and small business accountants. We work closely with our clients to achieve the best possible outcomes. To find out more, please contact us!
Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances.