If business is going well, you probably do not want to think about stepping down from the helm. In fact, even if your company is going through a tough time, you may want to be the one to see it through to better days. Unfortunately, this cannot go on forever. At some point, you will have to let go of your role in the family business and turn operations over to someone else.
Undoubtedly, this thought has been in the back of your mind. Perhaps from the very beginning, you had a dream of passing along the business to your children or a cherished employee. It may be decades before you are ready to take this step, but it is never too early to start planning for the important succession of your business.
When it’s time to step down
You may have built your North Carolina company from scratch, or you received it from the hands of other family members who put their hearts and souls into the business. As much as you love the business, you may also someday want the opportunity to enjoy the benefits of your hard work, perhaps by traveling or just slowing down.
Unfortunately, it is not as easy as simply handing over the keys to the next generation. Over 70% of family businesses fail in this way. You must prepare your successor for the role, the ins and outs of the business, and the financial responsibilities. You will want the change of leadership to be as seamless as possible to avoid disruptions to your employees and your clients. The work can start now, and you can groom your replacement gradually.
Dividing the wealth
While you may expect to live a good long life, nothing is a guarantee in life. Putting off training and preparing your successor is not a wise move. Nevertheless, you do not want to jump in without carefully and realistically examining the possibilities. Choosing your successor should not come from emotions or a sense of obligation, for example, to your firstborn. You may have to find other ways to fairly divide the ownership of the business.
If you find that no one seems capable or interested in running the company after you retire or pass away, you may have to make other difficult choices, such as selling or closing down. Your attorney can help you create provisions in your estate plan that will allow your heirs to benefit from your decisions while minimizing their tax burdens and other financial issues.