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June 26, 2023

Tips for creating a successful business succession plan

Robin Ann Bienemann

Creating a family business succession plan requires careful consideration and thoughtful planning.

Here are some best practices to keep in mind:

Start early: Begin the succession planning process well in advance to allow for a smooth transition and to address any potential challenges that may arise.

Communicate openly: Foster open and honest communication among family members to understand their aspirations, expectations and long-term goals for the business.

Regularly discuss succession plans to ensure alignment and minimize conflicts.

Identify potential successors: Assess the skills, capabilities and interests of family members who are interested in taking over the business. Consider their qualifications, commitment and willingness to learn and adapt.

Develop a development and training program: Design a structured development and training program to groom potential successors. This may include mentoring, job rotations, external training and educational opportunities to enhance their leadership and business acumen.

Evaluate external candidates: If there are no suitable family members for succession, explore the option of bringing in external candidates.

Conduct a thorough evaluation and selection process to ensure they align with the family’s values and vision.

Establish a clear governance structure: Define a clear governance structure for the family business, including roles, responsibilities and decision-making processes.

Consider creating a board of directors or advisory board that includes both family members and external professionals to provide guidance and oversight.

Develop a transition plan: Create a detailed transition plan that outlines the timeline, milestones and steps involved in the succession process. This should include ownership transfer, management transition and any legal or financial considerations.

Seek professional advice: Engage external advisors such as lawyers, accountants or business consultants with expertise in family business succession planning.

They can provide valuable insights, guidance and assistance in navigating complex legal, tax and financial aspects.

Address estate planning and wealth management: Integrate estate planning and wealth management strategies into the succession plan to ensure a smooth transfer of assets and minimize any potential tax implications or disputes.

Continuously review and update the plan: Regularly review and update the succession plan to reflect changing circumstances, family dynamics and business needs. This ensures the plan remains relevant and adaptable to evolving situations.

Remember, every family business is unique, so it’s essential to tailor your succession plan to your specific circumstances.

By following these best practices and seeking professional guidance when needed, you can increase the chances of a successful transition and the long-term sustainability of your family business.

Robin Ann Bienemann is the entrepreneur in-residence of the UConn Family Business Program.

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