For family businesses, conversations about succession planning can be tough, but essential. FBA Accredited Advisor, Anita Cohen from Nexia Sydney has some expert tips that you can use to help implement a succession plan into your family business.
If you want to eventually sell your business or pass your business onto a family member, then you’ll need to have a succession plan in place. A good plan will not only make the transition process easier but provide the necessary peace of mind to you and your family.
Regardless of the size of your business, your primary objective should be to successfully transfer your business to your successor. It sounds simple, but it does mean you need to plan ahead!
There are some key things that I recommend that you consider:
1. Choose a successor – do they have the talent, capability, skills and desire to take over the business?
2. Systems and processes – what needs to be implemented within the business now to meet the future needs of the business? It will also help you support and prepare your successor for their future work responsibilities.
3. Value your business – your business’s value will help you understand how much your business is currently worth and assist with your succession plan.
4. Put a plan into place – set realistic timelines, measurable milestones and make sure the plan is achievable.
To get started on your succession plan I strongly recommend that you gather together a network of trusted, reliable supporters. You will need this support network to provide sound and honest advice as you identify what is the best approach for you and your family.
Every family, plan and business is unique – there’s no set formula, so my advice is to:
Get expert help - a team of advisors which may include: accountants, financial planners, and lawyers. Your ‘team’ needs to be working together for you and your family
Respect each other in the process – everybody will have an opinion and everyone’s opinion will probably be different and that’s okay. Different points of view can be powerful in helping you weigh up the options and discover the right approach for you.
Seek transparency - around structure, financials, cash flows, assets & liabilities, asset ownerships & any unrealised losses/gains.
Define success – collaborate with your successor and identify clear goals and objectives to ensure a smooth transition. Consider a family deed of agreement to help clarify the end game and ensure a win-win for all.
If you are ready to deep dive into succession planning for your family business, learn more about our Succession Planning for Family Business course here.
About Anita Cohen
Anita is an FBA Accredited Advisor and is passionate about business growth, and about working with family businesses and individuals with the fundamentals of good financial management: accounting, taxation and compliance.
Family Business Australia and New Zealand provides this article for your information only. The content of the article should not be taken as advice. If you wish to explore this topic, please consult an advisor who you consider to have the expertise to provide specific advice in relation to your family business.