Dave Gosling – Partner
Open and honest communication is critical for succession planning
By establishing the right structure for the business at the outset, business owners have an opportunity to secure the best value for family members and other senior-level managers while protecting the long-term interests of the company. Introducing an employee share scheme, such as an Enterprise Management Incentive (EMI) scheme, for example, can help to reward key members of staff and allows the business owner to leave a positive and motivating legacy for the next generation.
With careful planning, alphabet share schemes can also be a useful means of distinguishing between family members and non-family members. For example, depending on which class of shares they hold, individuals may have defined voting rights or other specific rights related to capital or income.
In times of uncertainty business owners may feel that it is necessary to stay involved in the business for longer in order to support the next generation. If this is care then it is important that other family members and shareholders understand how this could affect them. For example, as the Brexit uncertainty is expected to last for some time, it may be necessary to put in place a number of succession scenarios depending on trading performance.
Leadership and decision making
Many family businesses have strong business leaders at the helm who are able to make decisions quickly. This can benefit the business as it will be well placed to take advantage of any opportunities that arise. However, if succession plans are put on hold, business owners must ensure that family members are properly rewarded and incentivised to keep bringing fresh ideas to the table and drive future growth.
In this way, family businesses can have the best of both worlds – the stability that comes from an older generation and an established brand that has experience of navigating times of uncertainty and the energy and creativity of younger family members.