If you’re beginning to plan for the days ahead when you finally retire and allow the next generation to take over the family business, take heed to these first 5 of 10 common mistakes business owners make during the handoff.
1. Not planning early enough for your succession
Passing down your family business is something that needs time and attention in order to run smoothly. You might be anticipating retirement, but to ensure a successful transition, plan even further ahead in case of illness, disability or even death. Since the success of your business handoff relies heavily on your family’s participation, experts suggest planning several years in advance.
2. Assuming your kin will mobilize automatically
You can’t jump to conclusions about the next generation’s desire to take over the business. They may want to break from tradition and start their own business, or enter a new field entirely. Avoid presumptions and have open talks about all of the possibilities well enough in advance.
3. Not seeking professional guidance in your exit planning strategy
As a business owner you should know when it’s important to seek out advice from professionals or people who may be better equipped to handle such circumstances. The end of your career as the owner or president of a company should be treated with the same delicacy and attention as any other part of it. There’s a lot to consider for yourself, for the business and for the family members who will continue to run it. Consult someone with experience in this spectrum who can help guide you through the transition making sure all your bases are covered.
4. Filling key positions based on family politics
Deciding who will fill what role won’t be easy. This is where family life and professional life collide and it’s a tricky situation to be in. You want to be open to peoples’ differences and allow their strengths and weaknesses to find their way into the perfect role to help move your business forward. Don’t be shy about making your choice based on what counts: who’s right for the position. Your son may want to be president but he might not have what it takes. Don’t let emotion overrun your professional thinking.
5. Expecting the same passion as you have
You built this business from the ground up with your own blood, sweat and tears. This business consumed every aspect of your life and your dedication went into making it the success it is today. Your family might be excited to step in and continue the tradition but they may not have the same fiery passion that you have about it. While it won’t be easy, you’ll have to be accepting of that. See things from their point of view and trust that what they can bring to the table will be enough.
Handing off your family business is something that takes time, planning and a lot of consideration, but you’ve come this far so you know you’ve got what it takes. There are more mistakes to be wary of during this adventure so join us next time as we complete the list.
If you’re a late-life entrepreneur seeking support in business planning and management techniques, Prime Strategies can offer the necessary guidance and expertise to help you reach your goals.