You may be the owner of a business and hope someday to have a family member succeed you as owner and manager. Not all family business successions work out, though. To help ensure that you can someday transition your business to your child or family member, it may help to understand why some owners fail to pass their companies on to the next generation.
According to Entrepreneur, emotional attachment to a business can hamper a business succession. Because you have invested so much time and effort into your business, you might cringe at the thought of letting it go. While this is an understandable reaction, a strong attachment to your business could hamper you in planning and carrying out your succession.
Delaying your succession planning
Planning your succession at the earliest possible opportunity could help you create a well thought out succession. However, a reluctance to let go of your business might cause you to put off your succession planning. By the time you are older and want to retire, you might end up rushing your succession plans, perhaps causing them to fail for lack of careful planning.
If you delay your succession plans for too long, you may not compose a plan at all before your death. This could result in a legal battle among your family members for ownership of the company. It might even cause the end of your business.
Hindering a successor
Your emotional state could damage your succession even if you do allow a successor to step into your role after you retire. Some business owners remain with the company even after retirement by claiming a leadership or a consultant position. This allows them to maintain influence in the business, but it can have negative effects on the people they pick to succeed them.
If you stay with your business with your successor in charge, you might send a signal that you do not trust your successor to handle your old job. Your presence may undermine the confidence the employees have in your successor and breed resentment in your successor towards you. It may be of greater benefit of your company to establish that your successor is independent of you and that your involvement, in whatever capacity, does not undermine who you pick to lead your business.
