Family business succession can be the most difficult way to transition one’s business if they have not prepared the successors early on. Furthermore, the emotional ties between parents and children can be a major stumbling block to a successful transition.
“There are many ways to exit your business, but none harder than selling to family members, especially your kids,” said CPA Chris Falco, a founding partner of the accounting firm Falco Sult. “It’s not just business; it’s personal, and it bleeds over into the holidays and family events now and into the future.”
To educate business owners on how to successfully transition a business to their family members, Falco lists the following two tips:
- Instruct children on all aspects of the business. “First off, the parents need to be willing to share the financial aspects of the company early on in order to teach the kids about financial management,” stressed Falco. “One of the most problematic issues when helping clients transition their business to family members is that they have not prepared the children to become business owners.”
Access outside help to assist the children in developing management skills. The fact that children might have come up through the company does not mean they are automatically well-equipped to be managers and leaders. To help them be viewed by employees as company leaders the parents should enlist the aid of an organization such as Vistage, a business advisory and executive coaching organization, as a tool to help them develop the skills of management, leadership and strategic planning.
“It is also a great way to have a quality third-party assist in motivating and developing the kids and taking the emotional components of mentoring out of the equation for their development, not to mention reducing family conflict,” concluded Falco.
To listen to Chris Falco discuss exit and life planning strategies for business owners, please visit http://thenala.com/north-american-speaker-series/chris-falco.