The company that you purchased, built or inherited may be part of the legacy you have dreamed of leaving for your children. You may have chosen someone, perhaps your oldest child, as your ideal successor for the business. You might intend to leave the company to them or to name them as the executive who will take over from you.
However, just because you would like your child to benefit from the company’s value does not necessarily mean that naming them as the successor would be the right choice for the company in the long run.
Nepotism has been the end of many successful businesses
If you have a child who is interested in business management or the industry in which you operate, then they might be a great candidate for taking over when you retire or die. However, if they have never worked at the business or in a related industry, they may not have the skills to manage the company even with the expertise of your current workforce.
Mistakes by someone unfamiliar with how your business operates or how to manage workers could quickly lead to a loss of talent, contracts and profit for your business. Hiring and promoting family members can do real damage to your business. You need to pave the way for the right person to follow you by creating a succession plan.
Your succession plan could include information about the training or work history that would make someone from your family a better candidate for the job in the future. You can help ensure a smooth transition and perhaps even motivate your child to acquire the skills or education necessary to take over your role someday.
Thinking realistically about your family and the needs of your company can help you create a business succession plan that achieves your goals.