8/4/2011
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Succession Planning For Family Businesses in the Aftermarket
According to the Small Business Administration, about 90% of American businesses are family owned or controlled. Ranging in size from two-person partnerships to Fortune 500 firms, these businesses generate about half of the nation’s Gross National Product.
Family businesses face a unique set of management challenges stemming from the overlap of family and business issues.
• Only 40% of family owned businesses survive to the second generation, 12% to the third and 3% to the fourth.
• Family owned businesses account for 60% of total U.S. employment, 78% of all new jobs and 65% of wages paid.
• Among the companies listed on the Standard & Poor’s 500 Index, 34 percent are family businesses.
• Nearly 40% of family businesses in America will be passing the reigns to the next generation over the next 5 years.
• There are 1.2 million husband and wife teams running companies today.
55% of CEOs Due to Retire within 5 Years Have Not Yet Chosen Their Replacement
Often, business owners are busy dealing with day-to-day issues and end up failing to attach enough importance to planning for their succession. Common reasons include resistance by the owner to let go of the reins, fear of retirement or inability to find or choose an effective successor. Transferring ownership can be highly emotional and complicated, which is why often it is ignored until it becomes a pressing issue.
It’s Never Too Early to Begin Planning for Succession
This one day seminar will assist in various aspects of succession planning. Clearly, the longer the succession plan is in place, the smoother the transition will be. Unforeseen events often cause a rapid (and frequently poorly planned) transition of the family business. A family business owner’s decision to retire is not as simple as no longer going to the office. Key questions need to be answered before the family owned business owner can “leave” the business:
• Will he or she have enough money at retirement?
• Who is going to own and manage the business?
• How will ownership and management be transferred?
• Should the business be carried on or sold to a third party?
A proper business succession seeks to alleviate or lessen these issues by setting up a smooth transition between the current business owner and the future owners of the business. Succession planning can be broken down into three distinct categories:
• Ownership
• Management
• Tax Consequences
Putting off business succession planning is a mistake. A proper succession plan can help ensure that retirement needs are met and that the business will continue to flourish for years.
There will be an all day seminar discussing succession planning options
for family aftermarket companies, distributors, shops, rep firms or
suppliers, held at the Marriott Sanibel Island Hotel October 12, 2011. The seminar is one day prior to the 30th Annual Service Specialists Association, which is being held in the same facility. This program is being jointly presented by ACOFAS and SSA. To obtain a registration application, visit www.truckservice.org.