Who will inherit the family business? What will it be worth when time for transition comes? Why is this issue so difficult to discuss? It’s important to engage your successful but soon-to-retire business owner clients in strategic planning now, especially if potential economic downturn is on the horizon.
The following is an excerpt from Jenifer’s blog , and will be discussed at the Business Builder Retreat this November in Puerto Vallarta, when Jenifer discusses “Rethinking Your Strategic Business Plan”, which will include the things you need to consider about succession.
Many leaders of family businesses have the expectation that their company will eventually be passed to the next generation and maybe even to the one after that. Perhaps this is why they established the company in the first place: to provide for the family’s financial needs over the long term, building wealth and security in the process.
Having possession and control of this type of “economic engine” brings with it the power of options and the benefits that are associated with not having to rely on others to earn an income. Achieving business longevity isn’t so easy, however, as research indicates that successful passage of a company to future generations is not typical.
The current environment is characterized by a number of important realities that impact long-term business survival: many companies are led by aging business leaders, most do not have a formal succession plan, and the next generation is getting restless. Couple this with a backdrop of significant disruption in terms of technological, economic, political, and social factors, and it’s easy to recognize that these days are like no other.
Let’s briefly consider what the current demographic environment means, in the context of family businesses:
When it comes to demographics, you can run, but you can’t hide. At some point, all companies will require new leadership if they are to continue to operate, and the extent to which this can be done successfully is largely dependent on one thing: thoughtful and formal transition planning. As simple as it might sound, research has shown that the vast majority of business leaders do not do this.
Additional educational resources: Learn more about the implications of demographics and how you can avoid the “trap” by reading Defusing the Family Business Time Bomb by Jenifer Bartman and Evelyn Jacks.
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