Many business owners have been through a particularly challenging time. Lots have faced months of uncertainty about their future and have spent the best part of the last year wondering how their business will continue to be affected by ongoing restrictions.
Some business owners have been so busy focusing on the here and now and ensuring their business can survive day to day, that they have been left with no time to think about the future.
On the other hand, there are many who have taken a step back, looked at the bigger picture, and realised their business is not invincible. Some may have reassessed their priorities following such an unpredictable year, and decided they’ve had enough of the pressures of being a business owner. Perhaps they’ve decided to take early retirement and are now turning their attention to the future of their business.
I always stand by the old adage that the best time to think about the succession of your business is yesterday. However, if you’ve not got round to it yet, today is a good place to start. It’s something many business owners delay because they are too busy with the ongoing demands and operational side of running a company, so they simply don’t prioritise planning for the future.
Waiting until it’s too late to oversee the handover of your business is the least favourable option. The best case scenario is to plan for this moment, stick around for long enough to oversee a seamless transition, then take the opportunity to enjoy retirement.
Planning for the future is particularly important for family business owners who often face a set of unique challenges when it comes to succession.
As a business owner, the first question is, who is going to succeed you? There are various options. You can either sell the business on the open market and make a complete exit, move to an employee ownership model, or pass the business down to family members via shares.
In any family business, it’s important to understand who does what, and where everyone’s expertise lies. There is a huge amount to consider. A fairly junior member of the team may have little to no managerial experience, but may hold vital knowledge of certain areas of the sector, which is essential to the business’s future success.
Some family business owners have some children who work for the company and others who don’t. In this scenario, ensuring fairness can be challenging. It’s important to avoid any disputes, and to consider how the family relationships will be affected by the succession, as well as what the ownership structure will look like going forward.
Planning for a variety of outcomes and scenarios is essential in order to ensure you have covered every base and have a solid understanding of the company’s future.
This is where expert advice from an external consultant can be hugely beneficial. An impartial adviser can be a great asset, as they can evaluate the situation with fresh eyes and no preconceived ideas about the business or its team members.
As a law firm, we can provide advice to ensure any business transition is watertight from a legal perspective, and our colleagues in Family Business Solutions can provide consultancy on how to ensure a smooth handover and oversee the relationship management aspects of a succession plan.
Planning for the future is the best form of insurance for your business. If something unexpected happens and a business owner is unable to return to work for any reason, a solid succession plan means the organisation will not be put at risk. Even if retirement is a long way off, it’s never too early to be prepared for the future.
Roddy Harrison is a Partner, Wright, Johnston & Mackenzie LLP. Family Business Solutions Ltd is the consulting arm of Wright, Johnston & Mackenzie LLP.