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Essential for passing down your family business

Many business owners in Louisiana want to pass down their companies to family members after their deaths. You may have taught one or more of your children the intricacies of operations, yet how do you ensure that the business will transition smoothly to them, sometimes even before you pass away?

Essential aspects for transitioning between generations

For successful business succession to the next generation, you’ll need these eight essential aspects:

  • A business plan defining where the company is and where it should go
  • Genuine commitment to the business
  • A sound corporate management system
  • Decide whether you are gifting or selling the business
  • Give heirs proper training
  • Ensure heirs work in management before ownership
  • Determine how to resolve conflicts
  • Documents governing expected behavior, a code of conduct and specifications if a shareholder dies.

Determining these eight key points will make the transition between generations easier. That doesn’t mean you and your family members inheriting your business won’t experience bumps along the road, but crafting a definite plan, much like laying out an estate plan, will put your mind at ease.

Mistakes to avoid

Don’t rest fully on your laurels once you have transferred the business to the next generation. Be careful of these three pitfalls:

  • Don’t ignore your family’s hierarchy
  • Not having enough flexibility for experimentation
  • Forgetting to celebrate victories

Avoiding the positives in your family business can create a negative business culture. Leverage strengths and make sure to embrace innovations.

Protecting your company’s future

Much like other parts of your estate plan, you should not take your business succession plan lightly. Take the time to consider what you want and who would be the best people to run the show in the future. Establishing this section of your estate plan is essential to your business’s future success.

Like other parts of your estate plan, the elements involved in business success can change. Review your overall business plan and the documents governing business success every three to five years. By reviewing them in a timely manner, you will ensure that you have the most up-to-date plan possible.