Choosing the right person to run your business

Has the time come for you to move on? What does that mean for your business?

Many factors determine whether a business succession plan is necessary for you and your business, and sometimes the logical choice is simply to sell your business.  However, many owners would like to have their business continue on and be owned and operated by their family members after they are gone.

Probably the most difficult decision that most business owners face as part of their business succession plan is choosing the right person to run their business in the event of their death, disability, or retirement.  In rare cases, there is a successor that everyone agrees upon, but most of the time this decision can be as difficult as navigating through a minefield, especially if there are equally qualified children or employees.

Choosing the right successor is critical to your business’ profitability and to your family unity.

However, there may be several partners or family members to choose from, each with various strengths and weaknesses to be weighed and evaluated.  Leadership is probably the most important quality that any successor must have. According to one study by the Wharton School of Finance, 15% to 25% of the variation in a corporation’s profitability is determined by the character of their chief executives. Training time for the new leader is also critical.

In making this decision, you should know that resentments may develop especially among family members, no matter which choice is ultimately made. Oftentimes, when more than one family member is involved in the business, the challenge becomes how to divvy up business responsibilities and assets in a way that allows your business to survive and still preserve family unity.

One idea that can be helpful in making this difficult decision is the use of an advisory committee (which you of course would sit on) to help vet the pros and cons of each of the possible candidates.  However, if you want to have an advisory committee help you in this process, you need to evaluate at the beginning the role of the advisory committee and whether you are comfortable in giving up some control of this decision to the advisory committee.

Call me today!

Our firm has helped families just like yours with businesses in a wide variety of industries work through these issues. In particular, we have the experience to handle the business, tax, and estate planning legal issues that arise in creating these plans, and we also have the relationships with experienced professionals in other related fields as well.

Call me today, and we can begin the process together. If you need help pulling your entire team together, I can be your “legal quarterback” to bring in the right people together to create a successful business succession plan for you and your business.