What is tax planning? Essentially, tax planning is something you do to put your business into the best possible tax position. After all, nobody... Read more
Family businesses are the cornerstone of a healthy Australian economy and, for many, the time comes when passing the business on to children is a priority.
It’s important and challenging to work out a strong plan for passing the family business to the next generation.
The conversations can be testing and sometimes emotionally charged, but it’s crucial to remain open and honest. Communication is the key here.
Succession planning is a process that families can use to establish how their assets will be passed down to family members.
Understanding everyone’s new roles and responsibilities is an integral part of the process and, often, where issues can arise.
Planning early allows for the next generation to research and study their new roles. Additionally, it allows everyone to understand what equipment remains, salaries, new roles and, of course, responsibilities and requirements to be finalised.
In the succession plan make sure you set out the foundation for equity sales, clearly state the family businesses legacy and, sensitively, state the shares and stakeholders’ inputs. Family does not always equal everyone getting the same.
Chances are your next family generation will face a tough act to follow. It’s crucial that everyone understands what is expected, but be wary of not over expecting.
Some challenges that can occur from passing on the family business to the next generation include: the pressure of not living up to expectations, sibling rivalry, not knowing how to connect with the business, changing lifestyles and loneliness.
Remember, communication is always key at every stage of the process. You want your family business to flourish and its legacy to continue but you have to be mindful of everything that comes with it.
Once everyone has been updated on what is required of them going forward, as well as updating any suppliers and external shareholders, it’s time to draw up the paperwork.
To allow for the smooth-running of such a big change, it’s often wise for everyone to test drive their new roles with help nearby. Closely shadow and monitor people and give guidance when needed.
This is your legacy and family business, it’s imperative that the next generation continue on its rich traditions.
Thinking about passing on the family business to the next generation? Talk to a member of the Altitude Advisory team here today.
Kerri Stutley, Tumby Bay Foodland
Gloria Rowett, Marion Holiday Park