Making plans to let go of a business you have built from scratch is hard, but if you want it to survive into the future after you are gone, then you must plan for your leaving the business. At first, this might seem easy. Many owners think they'll just leave the business to their kids, but if you have more than one child, you will have to decide which one will take charge and which one will effectively work for the other. Deciding which child will get to lead the business into the future can be one of the most difficult decisions you will make in your life. Here are three things you should consider before you arrive at your decision.
Choosing the Child
The child who makes you laugh and enjoy life may not be the child who is suitable to take over the leadership position in the family business. While it is true you are going to be picking a child to take your spot, you have to remember that this is a business decision and not really a family one. You may be counting on the revenue from the business to help fund your retirement, and you need to pick the child who has shown the commitment and acumen to run a business effectively.
Avoiding Sense-of-Loyalty Decisions
You need to look at the background and training each child has received up until this point in life just like you would if a stranger were applying for the job. You need to look at each child's skills, education, and training and determine how those attributes apply to your specific business. This goes beyond the loyalty you may feel for a child who has worked at the business since they were young and has stayed by your side. A child who broke away and learned about running a business elsewhere may still be better suited to manage your business than one who has worked on the floor for years.
Looking at Credit Worthiness
Banks and creditors will look at the business much differently when making credit decisions once you step down. The fact is creditors will be skeptical of the business decisions going forward until your child proves that they are trustworthy and creditworthy. If the child you choose to run the business has a poor credit history, the ability of the business to obtain credit will be negatively affected. The decisions you made and the actions you took will no longer be a factor in deciding how creditors will make decisions going forward. You need to make sure the child you choose to succeed you will not endanger the business through their past behavior if you want to protect your legacy and retirement.
For more personalized advice, consult family-business succession-planning consultants.
Share22 November 2016
Early in my career, I experienced disappointments. After happily working five years for a company, my job responsibilities suddenly increased. Unfortunately, my salary remained the same. Longing to take control of my situation, I quit my job in order to launch a home-based business. After years of working for someone else, are you ready to become an entrepreneur? Before taking this exciting step, consider consulting with a business attorney. This individual can inform you about the types of permits and licenses you might need to obtain. A business lawyer can also help you draft contracts. On this blog, I hope you will discover the benefits of working with a business attorney before becoming an entrepreneur.
