- Family Business
According to Oxford Economics, a world leader in global economic forecasting, there are more than 4.8 million family businesses in 2020 in the United Kingdom. No wonder; millions of entrepreneurs have worked tirelessly to build successful family businesses. Their successors have also put great effort in flourishing these businesses, but all such handwork can go in utter vain, if there is no succession planning by the current owner or key decision maker. In this blog, let’s delve deep into understanding the importance of succession planning in family businesses.
Preserving the Family Legacy
Every family business has a rich history and deep-rooted legacy that the founders or owners want to carry forward. Succession planning enables families to preserve those values and traditions cultivated by the founders and successors over time. Remember, selecting the next generation of leaders is essential to ensure the transition is seamless and the family legacy remains preserved.
Facilitating Continuity and Sustainability
Successful succession planning is of utmost significance to ensure long-term sustainability. Identifying capable individuals and grooming them ensures a smooth transition of leadership, which in turn, facilitates continuity and sustainability. This helps to minimize operational disruptions, especially in the case of an unexpected turn of events like the death or critical illness of the owner.
Creating an atmosphere of trust and maintaining the same between family members, stakeholders, customers, and investors is crucial to run a family business successfully. When there is succession planning in place, it aids in understanding the future course. It also boosts confidence in maintaining existing business relationships. When family members develop trust about the skills and capabilities of the successor, they are more likely to support the transition of leadership in their family business. The same goes for the investors. When they have complete faith in the family integrity, it is likely that they will continue to offer their expertise and resources to the family business.
Mitigating Family Conflicts
There is always a danger of potential conflicts within a family in the absence of succession planning. This happens because family members get confused about their roles or responsibilities in the family business. However, these family conflicts get mitigated when the guidelines about the decision-making process are established clearly due to succession planning. Thus, there is peace within the family, and mutual relationships remain preserved.
Talent Development and Retention
Success planning also means identifying talented individuals within the family or the workforce by giving them ample training, mentoring, and opportunities to enhance their capabilities. This overall process is a blessing for a family business leading to talent development and retention.
Now it becomes evident that succession planning is crucial for family businesses. However, it is essential to remember that the successor gets a profitable and financially stable business that he needs to run and grow further.
So, it is wise to take the advice of tax professionals or financial advisors before making such a move. Experts at CoreAdviz have considerable experience in helping UK family businesses in succession planning and devising thoughtful strategies for optimizing wealth transfer.