A good succession plan helps family business owners maximise future benefits, writes Feargal McCormack.
Last week, at an event, organised in association with Dundalk Chamber of Commerce, FPM outlined the steps family-owned entities need to take to secure the long-term future of their businesses.
Three-quarters of all businesses in the UK and Ireland are family-owned yet fewer than 30 percent survive beyond the second generation. One of the reasons for this is that business owners delay planning their strategy for exiting the business. Then, when the unexpected happens, such as an accident or illness, this creates conflict and financial losses that could have been avoided though better planning.
Succession planning is a process, not an event
At the seminar last week, we explained that succession planning is a process, not an event. The first step is to begin planning now. Think about where you want to be this time next year, then in five years from now, then in ten years, and so on. Keep in mind that not every succession plan involves passing the business to the next generation. You may need to think about options such as selling the business or bringing in a junior partner and developing them for a future leadership role.
Once you have decided on your objectives, you can begin to implement your plan to achieve them. A good plan will optimise your operations and maximise the future benefits for your family, your business and yourself. Remember to review the plan regularly as your business evolves.
We sometimes see clients failing to take account of the tax consequences of their succession planning decisions. As well as securing the continuity of the business and providing for your family members, a key objective of your plan should be to safeguard your personal financial independence and security. So, before you finalise your succession and asset transfer objectives, it’s important to consider tax planning.
Finally, remember that whatever your plan for the future of your business, it’s essential to communicate it to everyone involved. While it is natural for emotional factors to come into play, particularly in times of crisis, conflict can be avoided if everyone understands the plan and knows it is based on sound business reasons.
FPM organises regular events for family-owned businesses. If you would like an invitation to our next event, please contact us on 02830261010 or email Lauren Quinn email@example.com