Will your business survive without you? What plans have you made for the future? The transfer of leadership to potential successors has become more complex as family-owned businesses have evolved. As the baby boomer generation retires, there is an operational shift from one generation to the next, or sometimes the next couple of generations, in the leadership of family-owned companies.

More businesses are turning away from the traditional approach of a single leader. Surveys show that 40-50 percent of the family firms in the United States will be owned and led by groups of family members in the future.

If it is your hope to keep the business in the family and pass it on to the next generation, there are some basic questions that must first be addressed.

  • Does a family member really want to take over the business?
  • Is the person competent enough to be successful?
  • Does the family member have a passion for the business?
  • Is there more than one child involved?

Communication and planning are key to success. The US Small Business Administration states that there are four basic plans that need to be in place to ensure a successful transition of ownership in a family-owned enterprise. These include:

  • A strategic business plan
  • A family strategic plan
  • A succession plan
  • An estate plan

These plans should not be developed in a vacuum. Seek advice from professionals such as an accountant and an attorney to discuss the financial and tax implications of any ownership changes that are made. For additional resources on running a successful family business, see this list of booksĀ authored by professors at the Kellogg Center for Family Enterprises at Northwestern University. Need help making sense of the research, contact us.