Part of your estate plan involves leaving the family business to your child. This is known as a succession plan. It’s very important to you because of the high value of the asset, the way you can provide a long-term career for your child and all you have put into it over the years. Moreover, you care about the business and your employees.
To that end, you start wondering how much experience your heir should get before they take over for you. Should they work at your company before they start running it?
Experience is key
It’s true that experience can help dramatically, and it’s common for heirs to work within the organization before taking over. When they start running it, they have practical knowledge, they understand the company culture and they have watched how you do it for months or years.
Exactly how you do this is up to you. For instance, some owners bring their heir in right under them and basically have that person shadow them, like a second owner. After all, that’s the job they’re going to do eventually, so it makes sense.
Others opt to have their heirs start at lower positions within the company. This way, they really get to know what the business does on a daily basis and what is required to keep it running well. It’s not quite the same as being a traditional employee, but it’s closer.
No matter how you choose to set up your business succession, it is important to consider all of the steps you want to take well in advance so that you can set up a great succession plan that will allow your company to survive and thrive well into the next generation.