If you are like many New York business owners, your hope for your business is to one day pass it on to your kids.
Business owners planning to do this can take steps to make this transition go more smoothly for all parties involved.
Talk to your kids
One of the most important things you can do to prepare the next generation to take over your business is talk to your kids about it. You might start by addressing questions like:
- Do your kids want to take over the business?
- What are your goals for the company after you step back?
- Do your children have their own goals?
- Will all your children play a role in the business?
- How much will the transition cost?
- What do you expect the transition to look like?
These discussions can help you and your children get on the same page regarding whether they will take over a business and what that process will entail.
Get them ready
Statistics show that a small fraction of family businesses survive after shifting ownership to the next generation. You can improve the chances of a successful transition by helping your child prepare to take over the company.
These measures could include:
- Hiring them in a range of business roles
- Requiring them to maintain employment elsewhere to gain experience
- Urging them to complete business classes or complete college
- Including them in professional events and daily operations
- Appointing mentors to help your child learn the ropes from someone else in the business
Taking these steps sooner rather than later can equip your children with the experience and resources they need to take over.
In some cases, your children may not be the best people to take over the business when you retire or pass away. You might consider passing it on to trusted partners or employees; you might decide to sell your business to someone else.
If this could create conflict initially, consider alternative ways of having your children play a role in your business without taking ownership of it.
Put your plans in writing
Whatever you decide to do in terms of passing on your business, be sure you put your wishes in a legally enforceable document. A business succession plan can ensure that these plans are carried out appropriately and that the transition happens as smoothly as possible.