Friday, May 13, 2016

The Importance of Business Succession Planning

Business succession planning is a topic that many business owners sweep under the rug – waiting until they absolutely have to address it, if they do so at all. These business owners give little attention to succession planning. They think it’s an issue that will work itself out. But what they don’t realize is that statistically most businesses fail to successfully transition to subsequent generations. Indeed, less than one-third of businesses successfully pass to the second generation, and that proportion is substantially less for the third and fourth generations and so on. In our experience, family conflicts are the primary contributor to unsuccessful business succession. The main family conflicts concern (1) the unwillingness to change traditions and adapt, which is required to operate a successful business, (2) the interjection of emotion in what should be logical business decisions, (3) the unrestrained willingness to hire unqualified family members, and (4) the lack of family unity. Unaddressed, these conflicts can relegate a business to the category of failed business succession, where statistics say two-thirds of businesses end up. However, with proper planning and counseling an otherwise prosperous business can be passed from generation to generation providing benefit to each.
Michael D. Lum
If you are a business owner and have not planned your business succession or have not visited the topic in a while, please contact an attorney at JEFFREY BURR who can help introduce you to a team of professionals and participate with your current advisors to help you plan for business succession.



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