Colorado owners of family-run businesses need to consider how the operations of their companies will continue when they are no longer able to lead. Legal concerns with a growing business include what happens in the event of the death or retirement of the owner. It is important to take steps to help in the eventual transition of leadership.
A definite plan for succession can limit the difficulties involved in a leadership change. Such a plan should be prepared well in advance of the need to put it into action. Family businesses can be affected by the emotional nature of the loss of a loved one, and firm guidelines can bring order to the transition. A family charter may be beneficial if there are many members of the family with interest in participating in the leadership of the company. This document is useful for defining goals and designating those who are able to implement them.
A business owner may wish to designate those outside of the family who are potential leaders to carry on with business operations and management. Giving them equity in the business may help ensure their commitment to the company.
Planning for the future can be an overwhelming task for the business owner who is focused on growing and expanding right now. However, working with a commercial lawyer to develop a plan of succession can ensure that the foundation is created for a smooth transition if an unexpected situation affects one's ability to lead. Additionally, a commercial attorney may be able to provide insight related to selecting and preparing successors so that personal vision continues at the heart of the company's mission.
Source: Forbes, "Succession planning for family business", Carrie Hall, September 23, 2013