The Family Business Succession Plan

The Family Business Succession Plan

The Family Business Succession Plan is necessary for anyone. Now, let us understand what it means by family business succession Plan? Well, in the simple language, the family business succession plan means passing on your business to the next generation smoothly without any tax liabilities, family members conflicts and protecting the wealth of the business.

Let me explain you this by examples.

- Kongo Gumi Construction – is family owned. Founded in 578 AD in Osaka, Japan. It is currently managed by 30th generation. Some of the largest wealth creators and businesses are also family owned.

- Wal mart Stores – owned by the Walton Family, is the world’s largest company.

- In India too, the highest generator and creator of wealth are family owned businesses such as Tata, Birla, Godrej & Reliance…etc..

In the family owned Businesses, the head of the family is also the head of the business and the principal shareholder. Following are the vital issues in the minds of such leaders include,

- Who is most suited to protect, nurture and grow the business after me with the same values and traditions that I have Established?

- How Can I Ensure the integrity of my business and avoid division and the resultant loss of economic power?

- How will the ownership be transferred?

- How Do I ensure that the family wealth is preserved for the next few generations?

The Family Succession Plan is an Art and not the Science. The most recent example of an elaborate succession planning has been set by the GMR Group. The 58-year old group chairman, G M Rao has not only put in place a detailed succession plan to settle any business differences within the family, he has in the process segregated leadership from ownership.

In Summary, Succession Planning is essential for family owned business to protect not only the wealth of the family but also the brand value and reputation of the business and avoid disputes among the family members.