Author: Patricia Harris
In our experience, privately held real estate and construction businesses typically own, manage and operate the business through an extended family. Fathers, sons, daughters, siblings, cousins, uncles and grandparents take on varied roles within the business. Other family members may be passive owners.
As your property investments diversify, you need to map out your company’s future and the transition to the next generation. A succession plan is part of the overall strategy of planning for the financial well-being of you, your family and the business.
Here are five good reasons why you need to get a handle on your succession plan:
1. Measure Twice, Cut Once
This proverb holds true, not only in your business, but in succession planning as well. A succession plan increases the chances of the survival of your business to the next generation. Planning also helps identify potential troublesome issues in advance. This will help to minimize conflict between family members and increase the likelihood of an orderly transition.
2. Take Stock of What You Have
A succession plan will provide you with a realistic expectation about what your corporate holdings are worth.
3. Face Your Fears
You may fear losing control of your business. You may fear conflict between family members. You may also fear losing your wealth. A succession plan will not only help you face your fears, but will assist you to establish a plan and put mechanisms in place that will address issues of control, conflict and securing your wealth.
4. Identify and Prepare for the Next Generation’s Leadership
Your plan will include considerations related to key management positions and roles for family members active in the business. Assessing possible roles for “retiring” family members may include advisory and consulting roles.
5. Maximize the Return of Your Investment
Maximizing your wealth will include tax and insurance planning specific to you and your family’s circumstances. There is no “one size fits all” succession plan. However, there are key available and accepted strategies that will maximize your return on investment.
An Accountant Can Assist
The overriding objective of establishing a succession plan is the desire to ensure the smooth transition of control and ownership of your business and wealth to the next generation. Doing all of this, while maintaining family harmony and ensuring the business survives the transition can be accomplished with proper planning and professional advice from an accounting firm like Fuller Landau.
