Do you plan to pass ownership of your company to your children when you retire? If so, do you have a succession plan already in place? Approximately 75% of participants in a 2016 survey of family-owned businesses intended to pass ownership to the next generation, but 43% of them had no succession plan. 

There are many reasons why you may not have a succession plan. Maybe the business has been in the family for generations and you see no reason to break with tradition. Maybe you are so consumed with the day-to-day challenges of running the business that you have no time to think about the future. Whatever the reason, by not having a succession plan in place, you could be setting your children up for failure. Here are some considerations for making a succession plan for your family-owned business. 

Have an open mind 

Maybe your family has always passed ownership of the business to the oldest son in the family. However, adhering too strictly to this tradition is problematic for several reasons. It may place an unwanted burden of responsibility on the presumptive heir while simultaneously disenfranchising siblings who may have more interest, desire and qualification to run the business. 

Rather than naming a successor arbitrarily, take time to see which of your children turns out to be most willing and able to take over the business before making your choice. 

Allow for a period of adjustment 

Do not automatically transfer the business over to your chosen successor. Instead, allow your chosen successor to learn particulars of running the business by mentoring him or her for a while. Gradually let your child take on more individual responsibility for running the business. This process can take 10 years or more, so try to start succession planning early. 

Keep communications lines open 

Talk often with your children about your plans for the business as well as their professional goals. Do this as openly as possible. At the same time, do not neglect the business side of the equation. Discuss your plans for the business with your employees as appropriate.