There’s obviously a lot of challenge involved in building and maintaining a family business in Oklahoma (or anywhere, for that matter). Most family-run business owners agree, though, that it’s a very rewarding experience to work alongside those you love most and provide a service and/or product to the public, knowing that the business was created by your own ideas and led to success by the work of your own hands.
There may come a time in your journey when you start thinking ahead to a future beyond your business days, and you will have to make major decisions such as who will own the company, run it, work at it, handle its finances, etc. With the right business succession plan, you can forge a clear path to the future, although there are a few pitfalls you’ll want to avoid.
Major issues that often cause succession problems
Executing a solid business succession plan typically involves more than mere verbal agreement. It’s possible to simply discuss your wishes with family members, agreeing on who will lead your business into the future after you retire, but many who have forged similar paths have found it’s best to get a solid plan in writing. Below are a few issues that frequently cause succession problems:
- Do you know only about 30 out of every 100 family businesses survive to generations beyond their founders? Many times, lack of a written succession plan is the problem, as family members and others face ambiguities and disputes erupt.
- Exorbitant taxes after a business owner’s death are often a recipe for disaster for those inheriting the business. There are transfer strategies that can help keep taxes at a minimum.
- Family squabbles also run a lot of businesses into the ground. Whether someone’s upset with his or her newly assigned role within a business or believes he or she got the short end of the inheritance stick, if left unresolved, such problems can destroy a business in no time.
The good news is that planning ahead can help business owners and their families prevent discord and avoid other problems like high taxation. The sooner you discuss your plans with those involved, the better. There are also professional resources available to help you create a solid business succession plan.
For more on these matters, please see our estate planning and probate overview.