Patel & Dalrymple, PLLC April 30, 2020

Business owners who include a succession strategy in their estate plan may avoid leaving their families with unwanted surprises. When adult children unexpectedly confront the responsibility of managing a business, bitterness may set in.

Finding a reliable and dedicated successor ahead of time, however, could sustain your company for decades to come. Recruiting and training a suitable individual now could also help set up your family’s financial future.

Surviving Heirs May Sell the Business for Less than Its Value

According to a survey conducted by the Exit Planning Institute, family businesses passed on to second-generation ownership survive only 30% of the time. Failing to hire or prepare a qualified successor in advance could cause your family to face an unplanned and potentially disadvantageous business transition.

Heirs may view selling an inherited business as the quickest way to liquidate and distribute funds. Your heirs might also accept an unreasonably low offer, which could corrode the business reputation and value you worked for.

A Well-Suited Successor Can Benefit from Hands-On Training

Succession planning generally requires teaming up with an individual who complements what you have already invested in your business. Your replacement, however, may nonetheless require time to become familiar with how you managed things.

Regardless of the skill level and experience your chosen successor may possess, your hands-on guidance can make a difference in his or her ability to carry the torch as you see fit.

Succession Planning May Lead to A More Meaningful Retirement

As noted by Kiplinger magazine, succession planning could help you settle into a meaningful retirement after a smooth exit strategy. While you ease into your new life, you may appreciate an opportunity to stay in contact with your employees and customers. Doing so could enable you to preserve your business as a reflection of your individual efforts and vision.