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As the old proverb says, "Failing to plan is planning to fail," and this is especially true if you want to hand your family business on to the next generation. As explained in part 1 of this article, lack of planning is the primary reason founders fail to successfully pass down their business. In this article, we’ll discuss the elements that go into creating a succession plan.
If you’re an entrepreneur putting in long hours operating your business, you may think you don’t have time to set up a succession plan (it can wait till things slow down!) but you never know when health, an accident or economic conditions will suddenly make it necessary to initiate a plan. Think of it as life insurance for your business, and take the time to create a plan to ensure your company’s survival.Begin with the end in mind. Does your business already have a strategic plan with a mission statement and short- and long-range goals? If not, sit down with key family members and make those all-important decisions. First and foremost, does the younger generation want to take over the business? If so, do they want to manage it or just retain ownership? Once that’s been decided, you can move on to other questions, such as whether you want to eventually expand to other locations, franchise your concept, or move into other product lines.