If your parents own a successful business, you may wonder what will happen to it when they retire or can no longer manage it. Starting that conversation can feel uncomfortable, especially when ownership, money and family relationships are involved. Discussing their wishes early gives your family more time to make decisions and address disagreements.
How to open the conversation
Choose a time when your family can focus on the future without the pressure of daily business operations. Ask your parents how they see the company continuing rather than assuming what they want.
They may want to transfer ownership to a child, sell the company or keep ownership while someone else manages it. Starting with their priorities can make the discussion more productive.
Discuss how the family fits into the plan
Once your parents have shared their wishes, discuss how each family member might fit into the future of the company. Consider questions such as:
- Who might manage the company?
- Which children might become owners – one child, several or all?
- What role would your parents have after the transition?
- How should children who do not work in the company be treated?
- What happens if the expected successor changes their mind?
These questions can reveal different expectations before they create conflict. The Small Business Administration identifies succession planning as an important challenge for family-owned businesses in its guidance on family business succession.
Connect succession to estate planning
A business can be one of a family’s most valuable assets. Decisions about its future may need to be made alongside broader decisions about inheritance and estate planning. Coordinating these decisions can help prevent gaps or conflicts between the business succession plan and the family’s broader estate plan.
Turn the discussion into a formal plan
Once your family understands its goals, review the documents that govern the company and its ownership. Depending on the business structure, these may include an LLC operating agreement, corporate bylaws, ownership records and contracts. The plan should also be coordinated with the family’s broader estate planning strategy.
Talking about succession is only the first step. Putting those decisions into a coordinated business and estate plan can help your family prepare for the future.