At some point in your illustrious business career, you will surely feel the need for an able leader who can lead your company forward to growth and glory. It may be because you are seeking a retirement or may be you just want your offspring to shoulder the responsibilities of the family business. The decision to find a deserving successor can also result if the company is performing poorly and its worth is declining in the market. Whatever the case may be, planning to induct a new successor for the firm is a big decision, and should be implemented with care.
Family owned businesses carry with them a legacy of dedication and hard work. Hence, the succession should be carried out carefully so it doesn't harm the firm in any way. Here are some guidelines to smoothen the process
While considering the transfer of your business to your close ones, it is important that you decide the ownership transition a few years before officially leaving the office. You can segregate the different branches of your company and distribute the responsibilities to a few in the family. This will give them some practical experience, and prepare them for their responsibilities and designations that they are to hold in the near future. Chalk out a financial planning procedure with the help of your tax consultants and chartered accountants, that will help you during the transition period. Also, ensure that the tax planning is done in accordance with the firm's goals and objectives in mind.
Carefully Hand Over the Duties
You may want your first son to be the successor of your business empire, or may be you have plans to divide the duties and responsibilities among your various family members. Try to have a free and fair talk with every successor, convey your goals and objectives about the business, and make sure they have the necessary and required skills to manage their responsibilities. Also, it is necessary that the members who are chosen to run the enterprise own the larger share of the company in stocks and other financial assets.
Let Go Gradually
This is the most crucial factor that can affect your stock prices. Do not abruptly announce that you are retiring from the business. You hold a sensitive position in the management, and your every move is closely watched by your competitors and other market players. For small businesses, it may be easier to handle succession issues, but if your company is listed on the stock market, then be cautious about how you convey the message to your stakeholders, shareholders, media, and most importantly, to your customers. If your products enjoy a goodwill among the customers, then ensure that the brand image of the company is not affected. Introduce your successor as a confident player, who can handle the business effectively.
Planning for a succession, be it of a family-owned business or of an acquired business, requires planning and patience. Nowadays, many professional lawyers and financial consultants are available to guide you through the entire process, so seek help if necessary.