Have you given much thought to your exit plan from your family owned business? Having a business succession plan can be particularly important if you have a family business. It can be a tricky process and counting on some trusted outside help can be invaluable. Of course having a trusted team of outside professionals can be a real asset for any major decisions involving your company. Securing a solid attorney, accountant and tax professional can help guide you in making better decisions.
I was recently talking to Todd Neckers, a Grand Rapids area attorney at McShain and Bowie. We were discussing the value of outside resources. His feeling was that an outside source can offer valuable, unbiased insight into an issue like a business succession plan. “Some people feel that seeking counsel somehow threatens internal management, and that’s just not the case. There’s tremendous value to be found outside the four walls of a company” says Neckers. "It can be of particular value in creating a succession plan for a family business, where emotions play such a significant role."
With this in mind, we created 10 Tips for Succession Planning in a Family Manufacturing Business.
- Set a realistic goal for your planned departure. Of course you also want to plan for an unexpected departure, but setting a timetable for your transition out is a reasonable place to start.
- Create a list of potential candidates as your replacement. If it is a family member it should be someone who is trusted and admired and shares your love for the business.
- Begin conversations with those candidates. Keep in mind someone you consider a candidate may not see themselves in that role. The time to find out is now.
- Begin to serve as a mentor. You will have a certain amount of time to share your knowledge.
- Be prepared to accept new ideas. A new generation will have new thoughts on how to get things done. Be open to change.
- Use your trusted outside team to help stay the course. Having outside professionals in place can serve to solidify any transition.
- Plan on leaving the company on solid financial footing. This will help ensure the longevity of the business you built.
- Begin spending increasing amounts of time away from the business. This will allow you and your company to better accept this significant change.
- Be prepared to be called upon. You have likely built long-term relationships over your career and some customers may not want to work with anyone else.
- Make sure your transitional documents have been thoroughly prepared. Use a trusted legal professional to make sure all legal documents are properly prepared.
Anytime your manufacturing company is planning a significant move, it will benefit you to seek advice prior to making any move. If you would like to check in with Todd Neckers you can find him on LinkedIn. Feel free to ask him your questions. He is a good guy who knows what he’s doing and you’ll enjoy the communication.