The issues that must be factored into relevance before deciding that the family succession is the best way for your business include the following:
It is interesting to encourage one or more children to follow in your footsteps. But if it looks like your children won’t eventually have the skills to run the business, it is probably better to look outside the family.
If you bring your children into the business too early, they may lack the broader work experience that many business owners bring to their business when they start the enterprise. This might make you reluctant to place your children in a position of responsibility leading to slower development and possible job frustration. If you delay their entry into the business too long, you run the risk of your children seeking and developing another career opportunity that they won’t want to leave.
While the right time to make the transition will vary by business, try to ensure that the end of your children’s learning curve coincides more or less with your ultimate departure from the business.
Focus on Management Responsibility
One of the greatest challenges in passing a business to your children is giving up control over some or the entire decision making. Your children won’t be on the business long if they don’t have the authority to make the decisions they feel appropriate. You may not agree with the decisions that are made, but once your children have enough business experience to handle significant business responsibilities, they should be given the management responsibility and the opportunity to carry out their plans.
Your best advice on family succession issues comes from outside of the family. Board of directors, accountants and the financial advisor can help you identify any family succession problems and help ensure that sound business decisions take priority over any personal family issues that may arise. Hiring a specialized external firm to facilitate the overall process could be the most valuable decision for the future.