At some point, the owners of family businesses in Delaware confront the fact that they need to retire. If you are pondering how to transition your family business to new leadership, then you have many variables to consider. You may be focused on the financial nuts and bolts of the affair, such as tax planning, a new ownership structure and your retirement income. During this process, you will also encounter many subjective variables that may not present a clear path forward. A value-based approach to your succession plan could guide you through troublesome issues.
Translate family values to business values
With a value-based approach, you look to your personal values and principles. Planning from this perspective makes it easier to find new leadership that shares them. This builds upon the objective factors of who has the aptitude and interest to succeed you.
To identify your values, think about how your values shaped both business and family decisions. Ask yourself probing questions like:
- Do any of my children share my values?
- Will leaving the business to my children be a positive or negative event?
- What values do my children follow in their current lives?
Seek out the opinions of family members
Business owners who hope to see future generations thrive at the helm of their companies need buy-in from the parties involved. Parents frequently must balance concerns about fairness when dividing ownership among siblings. Engaging in open and honest conversations with family members can reveal what each person hopes for or aspires to.
A family collaboration could result in a business succession plan that represents your values and passes on a clear vision for the future. The stakes are quite high during this process because only about 30% of family businesses continue to succeed once the next generation takes over.