Creating a Transferable Family Business? Make Sure to Follow These 4 Steps
Jan 30 2017
Across the U.S., there are roughly 21.1 million firms without any employees at all. These firms, as well a significant number of other organizations that do in fact have employees, are often run by families. Unfortunately, many family business owners are ill-prepared to transfer their business as they near eventual retirement.
Along with working with experienced and high quality business valuation services that can provide large or small business valuation tools, owners should be taking their futures seriously and consider creating a transferable family business.
Beginning the Planning Process
It is not wise to simply stand still in today’s business environment. Your wealth, family, and business could be at risk at a moment’s time in today’s market, which is why it is essential that you are staying up to date with both your transferable options as well as your business valuation tools.
On the bright side, however, it is never too late to start planning for the “long game” and focusing on aspects like your retirement and what your family business will become after you have passed on ownership duties to your children or other family relatives. It is extremely important to commit to a business assessment process and begin planning for the future.
Here are your first steps in moving toward a successful transferable family business.
- Review Your Goals — The first thing you should do is sit down and really determine your personal and business goals for the future. If you want to be completely hands off from the business as you enter retirement, that is reasonable, but you might still want to at least have some control. Planning all this out is an important aspect of the future of the family business.
- Take a Look at Your Financial Situation — Again, determining your financial advantages and disadvantages on a personal and professional level is key. You are obviously in charge of figuring out your personal finances, but using business valuation tools will provide you with the ability to better identify your company’s financial situation. Once you’ve figured out both of these aspects, you can keep looking toward the future for your business and personal life.
- Determine Your Transfer Options — Talking to your family about internal transferring is an important part of this process, as you can get a better idea of who you want to be in charge in the future. This decision doesn’t have to be made in a split second, however, because it is so important. So really spend time considering every possibility and offer some form of training.
- Review Your Plan — The final step before the transferring process is complete is to thoroughly review every aspect of your plan. Take a second look at your finances, your estate plans, and your wealth and investment plans you’ve outlined. Make sure you’re honest with yourself throughout the entire process, as well, especially when it comes to your finances.
If you need assistance from a professional business valuation firm contact PeerComps today.