Top tips for safeguarding your family, business, and legacy’s future
For any family business, succession planning is a vital process to go through for continuity and prosperity. From nurturing talents within the family to developing strategic transitions, there is a lot of work that goes into these succession plans, and even more tough decisions to make as you prepare to leave behind the business attached to your family name.
The foundations are down, the bricks have been laid and the power tools are in operation, but what’s the best way to approach that daunting next step of succession for your family-run construction business?
The first step towards succession planning is, first and foremost, determining what you have as a business, and what you want the business to have moving forward. Revisiting and reviewing your business plan to incorporate your pending departure or retirement is a great way to get ahead of the game and allow yourself plenty of time to prepare for your future.
Perhaps the most vital of all decisions to make is the structure of your retirement, and ensuring the business is well prepared for a change of leadership. Outlining your remaining goals and incorporating them into a short or medium term business plan gives you a clear north star to aim for, and can be catered around how much longer you wish to work.
You should also make sure that the roles of each key stakeholder, upper-level management and board members, if applicable, are clearly defined and well-understood. This makes the transition much smoother and allows for a more seamless evolution into the next chapter of your family business. Making this process as streamlined as possible will preserve not just yours and your family’s legacy, but give the business the best chance of carving its own legacy for years to come, too.
There are many ways you can transfer ownership of a business, and different ways you can go depending on those big decisions you make. The most common succession plans come in the form of selling the business, setting up a trust, and stock gifting, and each have their own advantages. A trust allows family business owners to maintain a degree of control, while also ensuring assets are handled according to the wishes of the business owner.
Another shrewd tactic is what’s known as lifetime gifting, where assets are transferred over time, typically as a way to potentially reduce any inheritance tax liabilities. Current government rules make gifted assets that survive for at least seven years exempt from inheritance tax contributions. Transferring assets early can also allow business owners to take advantage of certain business rate reliefs.
It may seem obvious, but it is so important to involve your family in each discussion, whether it’s a professional decision on who your successor is, or a personal observation on when it might be best to step back and spend more time with your loved ones.
It is truly impossible to please everybody, but with succession planning you can do one of two things: you either hire your replacement within your own family directly, or you recruit externally. Either way, it is important to collate a list of potential successors and gather character references, as well as role suitability information, on each person.
Starting the conversation early allows business owners to seek professional advice, and keep their family updated on key decisions and progress of the succession plans. Advisors can help guide you through each step of the process with professional support, as well as minimising any potential financial risks associated with a transfer of business ownership.
At Duncan & Toplis, we understand the importance of a family business and its longevity. Whether you’re looking to pass the business down your family tree, or enable a smooth asset transfer, we have a team of experts ready to meet your needs. To find out more, get in touch with our property and construction team today.
