Key Harrington Barnes, PC

Family business succession planning

Business succession planning is an important thing for family business owners in Texas to think about. Although family business owners often plan to leave their companies to their children, simply stating that intention is not enough to ensure that the business will have continued success. To improve the chances of a family business surviving, the future leader should be trained during a transition period leading up to the original owner's retirement date.

Relinquishing control of daily operations can be difficult for many business owners. However, if the owner of a family business plans to leave their children in charge one day, they must allow them to start developing their capabilities about five to 10 years before they are set to take full control of the company. With careful planning, a family business may be able to avoid the failure that befalls two out of three family businesses after they are transferred to the next generation.

Family businesses often fail when they are transferred to the next generation because the new leader is unprepared or the wrong leader was chosen. Though family members forgive each other's flaws and poor performances, a family business must recognize these shortcomings so that they do not have a negative impact on the business. There may be one person who is more capable of running a family business, regardless of what family members might view as 'fair."

Whether or not they are owned by a family, partnerships, limited liability companies and professional corporations can all benefit from drawing up a business succession plan. An attorney may be able to help the owners of any type of business to create a succession plan before retirement.

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