Family Business: Handing off the keys to the store to the next generation
Once the major financial hurdles have been addressed, handing a family business over to the next generation can be handled in a variety of ways to suit your personal needs and goals. Obtaining professional help for determining any tax or legal issues should be placed at the top of the agenda. We value our local businesses, and their commitment to our community. Our guidelines can help you identify what items need to be addressed to ensure a seamless transition when handing off the keys to the store to the next generation.
Many local businesses have been in the same family for years. Your children may well have worked in the store growing up, and as they have gotten older, attended business meetings and begun to learn the ropes. The ability to help them get started while you are still able to advise and help them as problems arise is a wonderful opportunity for everyone.
Tips for Successfully Handing off the Family Business Keys to the to the Next Generation
As the current owner, and possibly the person who started the store, you will need to determine how much, if any, monetary compensation is required. The business can be transferred in various ways, gifted, sold at full or partial value, or put into a family corporation or trust with a different person named as manager.
A business plan and a transition plan can help your successfully transfer the business. If you are relying on a set income from the store, it is important to identify the role you will play in ensuring you receive it, and to have a contingency plan if it is not able to meet the goals.
Protecting the business against inter-family disputes should be discussed with a lawyer prior to transfer. Divorce, death, and changes in income can lead to problems between family members.
Ensure the person who is taking over the keys to the family store has the knowledge they need to operate it. If this person has not been active in all aspects of the business, they will require training. You will want to begin this process at least six months to a year prior to transferring the business.
Discuss with all family members what each person's role, if any, will be in the business throughout the succession, and after, if you are keeping a portion of ownership.
Create a succession timeline and plan based on both of your needs. Some owners prefer a gradual turnover, while others do so all at once.
Accept that some things with the business will change. New products and technology are changing the way businesses operate and a fresh set of eyes may identify areas that are currently not performing as well as they should. Encourage your family to put their own personal stamp on the store.
We at the Chamber encourage all stores and family businesses to use our resources to increase their ability to be successful and continue to grow our community.