Planning who will take over your business after you retire, step down or pass away is an important task to take care of while you still can. Some business owners start their companies as family operations, and they intend for a son or daughter to take over the business someday. However, there are company owners who wonder if passing their business on to a child is the right thing to do.
Entrepreneur explains that keeping a business in the family offers some benefits. Your relatives likely know how your business works and what its brand represents to the public, so handing your business to one of your children may continue operational continuity. Also, if your children have worked in the business for some time, they will have firsthand knowledge of how the business operates and will be ready to assume leadership if you designate one as a successor.
However, you must make sure that your child actually wants to take command of your business. Some business owners have children with different wishes and dreams for their lives than to run the family business. For instance, an older son may want to work in a different industry, but a younger son or a daughter may have the same passion for the business as the owner, making one of them a better successor.
In some cases, business owners may have children who work for the business but do not want to stick around when their parent retires or otherwise leaves the business. In such situations, business owners may want to work out a buyout agreement or some way their children can sell their ownership interests in the business. This may reduce the likelihood that conflict will erupt after a parent passes away.
Still, sometimes business owners do not find any family member who can take over the business. If this is the case for you, you might find an employee within your company who would make a good successor. Some owners pick out a successor candidate and train that person so that someday that person can take over the business. Ultimately, the decision to designate a successor will depend on your particular circumstances and those of your family.