It’s very uncommon for family businesses to make it to future generations. One study found that a full 70% of them either fold or get sold off before the second generation – the business owner’s children – take over. If you look at the next generation, that percentage goes all the way up to 90%.
As a business owner, this doesn’t mean that you shouldn’t do your estate planning to pass your business on to your children. You just need to know how to make a proper succession plan to give them the best chance to succeed. The odds are stacked against them, so everything you can do helps.
Start planning early
For example, one of the best things you can do is to start planning as far in advance as possible. This way, you can bring on your intended heir and teach them how to run the business while you’re still working there. They can ask questions, learn the ropes and find out what it will be like to run the company before they officially have to do so.
Capitalize on strengths
Another thing to remember is that your children are all going to have different strengths and abilities. Instead of just giving them the company and telling them to run it, try to find roles that they can all do that play to these strengths. If you can properly divide their duties and obligations, you can successfully leave a family business to multiple children without causing a lot of disputes and disagreements.
Overall, you can just see how very important it is to have the right plan in place. Think about the future of your business, the future of your family and what you can do to create the right plan today.