The founder of a small business has likely spent his or her life dedicated to the company, sacrificing time, money and other resources so the venture can grow and prosper. However, there is often one other thing that has received a similar amount of attention – the family.
This is why it is only natural that small business owners want to pass the torch to their younger generations. Keeping family in charge of a company can be a rewarding and enjoyable way to stay involved after retirement, but it requires a few steps to ensure the financial plan stays on track.
In order to avoid making a mistake in letting family run the business, here are a few tips and tricks to guarantee everything goes smoothly:
Make sure they really want it
Being a family member can complicate the transition from one business leader to the next. In some cases, a relative doesn't have the heart to say that they really don't want to assume the mantle. If this is the case, that could lead to additional problems down the line.
According to Fortune, the first step to ensure it goes fine is to make sure they really want to become the next head of a small business. The same goes for the current leader – do they actually want this person to be in charge? If not, then there is no reason to move forward, even if they are family. But, if so, that is a good thing. The next family member in line has to have a passion for this industry, because everybody could suffer if they don't.
Bring in outside help
One of the other more complicated aspects behind a transition within a family business is the evaluation stage. Including children in a small business now means they are privy to all the professional conversations that take place, and that leaves little room for a personal relationship.
When it comes time to pass the torch, they'll have to be questioned and evaluated like they are anybody else. This is why professional help can be so useful, according to Inc. magazine. Bringing in an attorney can alleviate the responsibility of asking tough questions and making the hard choices. A mediator will allow the small business owner to remain part of the family, instead of a leader grilling their potential successor.