Whether the opening of your family business was generations ago or only a few years in the past, the thought has certainly crossed your mind that one day you will have to pass the reins to someone else. If the time comes at your retirement, sudden illness or unexpected death, will your successors be ready to step up and keep your Tennessee business running successfully?

Such concerns are common for small business owners, but few take the time to create a plan for a smooth transition of power. In fact, many simply assume the oldest child or the next sibling will take over. This is only one of many mistakes you will want to avoid as you prepare your transition.

Avoiding common missteps

Ideally, you and your family members have clearly defined roles in the business. You share the same values and allow common goals to drive your decisions for the company. This arrangement is more than having your kids drop in on weekends to help out. You have a legal framework, clear policies and fair compensation arrangements in place. You are also educating the next generation, preparing them a step at a time and teaching them to love the business the way you do.

Without these and other principles in place, you may find your business in chaos when you are ready to step down. Some of them most common problems that occur with a poorly prepared business include the following:

  • If a business leader's control of the business is so strong or the founder is unwilling to let go, the next generation may feel insecure about taking over or worry that the leader does not trust them.
  • When the structure and management of the business does not clearly define family members, such as in-laws, and their roles in the company, confusion may result in disputes and resentment.
  • Even in families that do not run businesses, communication may be challenging. Failing to communicate with one another may cause a breakdown among those who will be taking over your business.
  • A younger generation taking over may have different philosophies from the older family members. If one group wants to take risks and the other wants to preserve wealth, the business may ultimately suffer without a resolution.

Fortunately, you do not have to prepare your transition on your own. With an experienced attorney on your side, you will have the resources to minimize the risk to your business and create a legacy that will allow your family business to continue moving forward successfully.

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