Good Succession Planning For Family Businesses Is Vital Plan ahead and ensure a smoother transition from one generation to the next
Kenneth Logan of JRW CA looks at why more than 70% of family owned businesses do not survive the transition from founder to second generation and advises that a good succession plan will ease the process and overcome the common obstacles...
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eople are now living longer than ever before, which means that they are working longer too. In fact, there are more than a million employees over the age of 65 in the UK, with a quarter of Britons now expecting to work into their seventies.
many older people, who enjoy what they do and are deeply committed to their companies, don’t want to stop working, they just want a bit more leisure time!
Since the Government scrapped the default retirement age in 2011, retirement has become an
But when it comes to family owned businesses, succession planning is an absolute priority and something that should be planned for well in advance.
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Kenneth Logan MA (Hons) CA, Associate, JRW CA An Associate at JRW CA based in the firms Edinburgh office one of five offices in the Scottish Borders and Edinburgh. With accountancy, tax and audit experience in a wide range of sectors, Kenneth specialises in assisting family owned and owner managed businesses. Kenneth has a MA (Hons) in Accountancy & Finance and is a Member of the Institute of Chartered Accountants of Scotland, Junior Chamber International, of which he was Best President in Europe in 2010, and BNI Britannia. Kenneth enjoys spending time with family and friends, travelling and is a season ticket holder at Easter Road, the home of Hibernian Football Club.
How will ownership be transferred? If succession is not an option the business will need to be wound up or sold? What is your business worth?
Succession Planning for family businesses
Of course, there does come a time when everyone wants to retire, but if you own a family business you will know that this isn’t just a case of deciding not to go into work anymore. Apart from ensuring that you have enough money to retire on, the whole question of what happens to your business after you retire becomes of paramount importance and there are many factors that need to be addressed such as: increasingly subjective issue which varies considerably from individual to individual and from business to business. And it is true to say that
@JRWCA
Who is going to manage the business when you no longer work the business?
However, if the business is going to be carried on by relatives then it is important to have a business succession plan in place to manage these issues, ensuring a smooth transition between you and the future owners of your business. With family businesses, succession planning can be especially complicated because of the family relationships and emotions that are involved and because most people are understandably uncomfortable discussing aging, death and their financial affairs with their loved ones. This is probably why more than 70% of family owned businesses do not survive the transition from founder to second generation. In most cases, the combination of taxes and discord within the family are the prime reasons why a business does not survive, both issues that a good family business
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