How to plan the successful succession of your family business

If you haven’t seen the series, 80-year-old Logan, a ruthless Rupert Murdoch-style mogul, offers each of his offspring a sniff of the top job. He shuffles them in turn, like a pack of cards, before pulling the rug away and dashing their dreams in the most humiliating way imaginable. Needless to say, the situation doesn’t lend itself to a happy and harmonious family unit.

But whilst Logan seems to enjoy reaping carnage and misery on his already dysfunctional family (it’s great TV), we’re pretty sure it’s not a scenario you’d want to see played out in your own home.

Business succession is the process of deciding who will take over your business when you retire so it can continue to run smoothly and keep customers, employees and shareholders, happy. It’s as relevant for a small family-run business as for a large corporation.

Research by PwC revealed that 43% of family-owned businesses do not have a succession plan in place, and only 12% of family businesses make it to the third generation. Boards without a succession plan risk disruption, uncertainty and conflict, all of which impact the business’s long-term success. Unlike board run corporations, family business succession can reveal a host of personal emotional issues, all of which require delicate management.

If you answered ‘no’ to any of these questions you’re not alone – but neither is it too late to start planning.

Family business succession planning can be more complex than it first appears. Every business owner will have their own set of expectations and goals. For some, the first order of business is the long-term success of the business operation. For others, the main priority is the preservation of family wealth through estate planning, IHT, retirement, insurance and investment planning – all of which can be a challenge that might not align with the aims of the business.

Don’t leave it until the last minute – start planning years in advance.

There are a whole host of reasons why business owners delay putting their business succession plans in place: You don’t know where to start, you’re avoiding difficult conversations, it’s complicated, you don’t have the time to commit to it right now, or maybe secretly, you don’t really want to retire.

Whatever your anxieties, the earlier you start, the easier it will be in the long run. Few business owners ignore business succession planning altogether, but many take a narrow focus, including only the areas that are easiest to achieve. This can result in a false sense of security and a poor outcome for everyone involved.

The biggest threat to a smooth transition is a lack of communication from one generation to the next. It’s crucial to articulate your personal goals and vision for the future of the business while also considering the needs and concerns of your family and other stakeholders.

That doesn’t mean you need to give everyone exactly what they want. But it’s essential to include your family and any other stakeholders at the goal-setting stage so they understand the reasoning behind your decisions and come to accept them. This will ensure all parties feel a sense of ownership in the succession plan, which will significantly improve the likelihood that it will play out as you intend.

An Amber River financial planner will help you navigate the entire process so that nothing is left to chance. And unlike Logan and his unfortunate family, the transition of the family business from your capable hands to those of your successor will be a smooth and pleasant experience without setting off any family feuds.