6 Ways to Make Sure Your Child Is Ready to Take Over Your Business

It’s almost time to pass on your family business. Here’s how to get a family member up to speed.

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There always comes a time where you need to hand over your business to someone else. In many cases, business owners want their children to take over, which is an acceptable exit strategy, but that son or daughter may not have the same expertise as an outside person that you could have sold the business to.

Part of the succession planning process then, isn’t just to choose a new owner, it’s to also make sure that the family member you have picked knows enough to take the business into the future. Here’s how you can make sure they get up to speed.

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    Have them work elsewhere first

    Experience is important in the corporate world, yet many family members never work outside of the family business. That can be a mistake, says Jack Courtney, Investors Group Vice-President of Private Client Planning. The more business experiences a child can rack up, the better it will be when they eventually take over. “I have encountered a few successful business owners who want their children to gain experience outside the family business before they come work for the family,” he says.
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    Talk about weaknesses

    It may not be an easy conversation to have with a son or daughter, but it’s important to speak openly about what the future owner can improve on. “Discuss your successor’s weaknesses and what experience that person will need before taking on their new role,” says Mariska Loeppky, Investors Group Director of Tax and Estate Planning.
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    Share inside information

    If your family member’s not in the know about everything from financial performance to business processes, they need to be. Show them where every dollar goes and how the business runs. As well, introduce the soon-to-be CEO to your clients, suppliers and other business contacts.
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    Let them be your shadow

    If you want your child to take over the business, you probably like spending time with them. That’s good, because the more they can hang around and watch what you do, the better. Have them shadow your every move for a few weeks, if not longer, she says.
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    Have them share their vision and set objectives

    Before you say goodbye, make sure your child has a plan for the future. “Work with your successor to ensure that they have a vision – and be prepared that they may not have the same vision as you,” says Loeppky. “In that case, ask them to tell you about their vision and how they plan to implement the change. Meet with your financial advisors, lawyers and accountants to make sure that your company is structured properly for the future.”
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    Talk to staff

    Part of preparing a successor is also making sure the staff buys into the change. Make sure your employees are aware of the transition in leadership that’s taking place and ask them to be involved in the process.

As a family business owner, it can be incredibly rewarding to see your family business transfer to the next generation successfully. To ensure your family business can thrive after the succession takes place, the time to start the succession process is now.

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