4 Steps You Can Take Right Now for Your Family Business Succession Plan

4 Steps You Can Take Right Now for Your Family Business Succession Plan

It’s a conversation business owners are sometimes reluctant to have. You’re not ready to talk retirement, and you definitely don’t want to think about an unexpected death. But it’s something every family business needs to plan for: What happens when you’re ready to pass it on and leave the company?

Don’t wait for your lawyer or CPA to bring up succession planning. Even if you have no plans to step down, even if you’re a decade or more away from retirement, this is something you can start addressing right now with a few simple additions to your annual routine.

  1. Determine the best path forward – and talk about it as a family.

    Before you do anything, decide which is the most likely scenario for how your business will continue after you’re gone. Will a family member step up and take control? A non-family member? Or will you sell the business?

    There’s a great piece in the Pinnacle Learning Center that walks you through some of those options. No matter which one you think is best, start with good, honest conversations with family and others who work for the company. Together, you can start to develop a living succession plan document that can be updated annually or as needed.

  2. Do a deep dive into the company finances.

    This can really serve two purposes. If you plan to pass on the business to family members, have them start learning the finances now. Look at cash flow, operating costs, growth projections, known  capital expenses, debts – everything in your books. The more they know now, and the more they follow the finances as they change, the better prepared they will be to take over when the time comes.

    But if you plan to sell your business, this same analysis could help you get an idea of what your company might be worth when the time comes. Then you can decide the best timing for a liquidity event and start to develop a plan for how you can create wealth for yourself outside of the business. That sort of formal valuation process can be done annually and will be a major boost to your estate planning process.

  3. Have your successors sit in on big meetings, annual reviews and any strategic planning.

    This falls squarely into the category of “the more they know, the better off they’ll be.” They may not be running the company yet, but your expected successors should be involved in – or at least knowledgeable about – how it grows and progresses from year to year. That includes big meetings with some clients, your CFO, investors and other leaders in the company. You should also consider giving them a seat at the table in strategic planning, partially to listen and learn but also to have a voice in decisions that have long-term effects. The resulting strategic plan will play a significant role in your succession planning document, and vice versa.

  4. Update your trust or estate documents.

    If you were no longer in charge of the business tomorrow, what would happen to it? This is the part that everyone shies away from. But the unexpected can happen, and you should be prepared.

    Once you’ve decided on what will happen to the business after you’re gone, work with your attorney to write it into an airtight will and estate plan. That way, you can have the peace of mind in knowing that your wishes will be carried out and the company you spent your life building will survive.

It’s never too early to think about succession planning. If you want your business to continue and build on the success you started, now is the time to take action. Work with your financial advisor, CPA and attorney to build the right plan for your company. Then you can start taking steps years in advance that will help execute your plan when the time comes.


Rick Seadler is a financial advisor based in Nashville, TN, who works with small and middle market businesses across Tennessee and Kentucky. He can be reached at 615-744-3721 or rick.seadler@pnfp.com.

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