Why plan in family owned businesses?
Effective succession planning in family owned businesses is required:
- To establish strategic goals of the organisation
- Identifies challenges to achieve those goals
- Defines roadmap to achieve those goals in current leadership and future leadership
- Generates long-term business value
- Analysis of existing qualification & expertise and deriving the future needs
- A thoughtful plan reduces uncertainty in businesses as well as families
- It helps build trust in between the business and all stakeholders like investors, clients & vendors
- Ensures employee retention
Succession planning & it’s key issues to be dealt with for family owned businesses
- Management structure for future
- Maintenance of Growth & Profitability
- Retaining Human Talent
- Percolating Responsible Culture
- Capital Management
- Risk Assessment
- Tax issues and regulations
Core aspects for family owned succession
- Business leadership and ownership may be the same or different depending on the business needs
- Not necessary the business leader is the business owner
- A key personnel with required qualifications, expertise needs to be the leader. He/she could be an external personnel or a family employment with compensation.
- Succession plan derives the ownership, leadership preserving the family legacy & it’s values.
- It ensures transfer of wealth to the next generation of the family
Consideration of External Options to for succession planning
- An analysis preserving the family ownership and further consideration of outside stakeholders
- Selling business to new stakeholders
- Investors, private equity
- Public Offerings
Prepare & Execute Plan with the help of experts for the following:
- Transparency in the proces
- Good governance
- Tax implications analysis
- Stakeholders involvement
- Financial data analysis for accurate judgments & decisions
- Infrastructure availability
- Human resources
- Technology
- Processes
– Execution of plan should be with effective communication for smooth transition and involvement of all stakeholders.
– Formulating good governance practices to enact family values.
– Restructuring, transferring assets
– Maximizing business value through transfer or sale.
Family owned businesses should consider the succession agenda for:
Family Considerations:
– Financial Security
– Governance and family values
– Next-generation
Business Consideration:
– Business Control
– Risks involved
– Liquidity
– Growth & Performance
To know more email us at empower@empowereducation.in
