PWC extract on common business succession mistakes
Because of the nature of family businesses, owners often make a series of mistakes that hinder the effective succession of the business. It’s easy to understand the reasons behind the mistakes, but it’s critical to avoid them.
The common mistakes include failure to:
/ Work on a succession plan
/ Identify a successor
/ Adequately train the successor
/ Actively resolve competition for the successor role
/ Employ leadership delegation and oversight
/ Distinguish between proper compensation and earnings distribution policies
/ Enable owners to dispose of their ownership stake in an orderly manner
/ Plan for transfer of the ownership of the business
/ Make lifetime transfers of ownership interests to save taxes and protect assets
/ Communicate plans in a timely manner to key stakeholders
As business owners we should use the checklist above as a guide to what not to do and what we need to ensure we have handled in our own business to ensure a successful business succession plan and ownership transition.