Succession planning is key to protecting the future prosperity of a family business. Owners of family businesses should assess their short and long-term objectives, potential structural risks to the business and plan for generational changes. Businesses should also assess the impact the loss of key player could have on the day-to-day management, again both short-term and long-term.
Businesses should aim to have robust and logical plans agreed and put in place that will avoid unnecessary last-minute conflicts, ambiguity and muddled business strategies and help maximise available tax reliefs along the way. It is all too common for landowners and agricultural businesses to leave succession planning until the ‘11th-hour’, just ahead of the passing of a family member, or when it is often too late, i.e. after the sudden death of a family member or when a key player can no longer continue in their role. This often leads to an illogical approach to planning, making the whole experience stressful and worse than necessary; can lead to family and shareholder disputes and place a business under unnecessary financial pressure. Good succession planning allows time for potential business risks that could have a significant impact on the business to be discussed, evaluated and key objectives agreed allowing the correct strategy and business structures to be adopted.
Businesses and families should take a proactive stance by starting discussions early on, ensuring all involved parties have a chance to voice their future ambitions and objectives and how they wish to achieve them. This will provide a platform for logical, well thought-out plans and appropriate structures to be considered.
Future generations should be brought into businesses from an early stage, slowly building skills and knowledge whilst older generations still have overall control. Clear lines of responsibility provide accountability, but also helps younger generations feel they add value and are a valued part of the business.
To plan, it is recommended that an independent third-party agent is appointed to offer advice on structures to assist with discussions. This can also help avoid a breakdown in communication.