What is succession planning?
Succession planning is often confused with Estate Planning. While similar, there are differences. Estate Planning is the process of transferring wealth and assets, of which your family business may be a part. Succession Planning on the other hand is the process of transferring both ownership and control of a business, with the goal of keeping the business operating into the future.
Succession planning is about taking control of the inevitable. Eventually, every business owner must leave the business. If no planning is done, others such as lawyers or the government will control the process. However, if the family plans for an orderly transfer, the older generation can afford to retire leaving the business in the hands of a successor. Avoiding a family and/or business crisis.
When should I start succession planning?
If you have been thinking about when to begin planning for succession, then this answer is now. It is never too early to start.
Succession Planning is a process, not an event to happen on a single date. For a family business the process should start well before children enter the business.
Retirement – Now what will I do?
For many people retirement presents a problem. What will we do? I have only done this job all my life and the thought of doing nothing is scary. I feel that I am no longer of value to the family or society.
There is life beyond farming. It equally presents opportunity and challenge. How do you want to be seen by family and friends? You could be seen as the revered chairman of a successful business, the mentor to your successor, the advisor who can also lend a hand as required or as the obstructionist and grumpy belligerent old man. The choice is yours.
Why use a Succession Planning Specialist?
Who should I use?
Each of the professions states they deliver succession-planning services that provide solutions for the founding generation. However as a new generation grows an interest in the business there may be a conflict of views and opinions, values, needs and objectives.
The old method of the senior generation imposing a structure on the next generation can cause resentment, misunderstanding and not meet the needs and aspirations of the subsequent generations. Too often decisions are made about the farm and too little consideration is given to off-farm children and how their future needs.
An accountant’s perspective is about structures, taxation and financial implications for the transfer of assets and control of the farm.
A lawyer’s perspective is about wills, powers of attorney and looking after the interest of the asset holder.
A financial planners perspective is about superannuation and investments to enable the vision to be achieved.
Our approach is working with the whole family. We identify the needs and aspirations of each generation, building understanding and relationships, communications, managing expectations of all the family while sorting out how to transfer management and eventually assets between the generations.
The succession plan has stalled, what do we do now?
The best way to get back on track is to identify the major impediment by reviewing your existing plans to decide if the plan still meets your needs or have your needs changed.
If your needs have changed the plan needs to be revised to reflect the changing circumstance.
If your needs are still being met, schedule a family meeting to get the process back on track.
When should we review our Succession Plan?
Succession Plans should be reviewed and revised regularly or when a life event occurs such as:
- Restructuring of the business
- Death, divorce or disablement of a family member
- Marriage, how will the new partner be brought into the business
- Employment of a family member
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