So, who will figure prominently in your succession plan.  For fear of being repetitive on prior blog posts, there are two components:  ownership and management of the family business.  We will discuss both in a little detail.

Ownership.  This would generally be based on family and possibly key employees who have or will become shareholders of the business.  For these people, the objective should be to pass on the business after your passing with as little disruption to the business operations as possible.  This will enable the “living” that the business has given to the family to continue.

Management.  Just because a person is a family member should not necessarily give them the entitlement to work in the family business, particularly as you move into generation 2 and generation 3 and the numbers become larger.  Some family businesses have codes of employee conduct where the jobs in the business are granted to the most capable and qualified individual AND the person hired is paid a market salary commensurate with that person’s qualifications and contribution to the business.  In the absence of a stated policy, the business can become ambiguous and be weakened by hiring family members just because they are family members.

Take away point….write down what you are doing and why as it pertains to who will form an integral part of your succession plan.

Learn, think, apply!