Back to Insights

6 Key Elements of a Family Business Succession Plan

Steven E. Staugaitis, CPA, CVA
Steven E. Staugaitis, CPA, CVA Director, Audit & Accounting, Small Business Advisory Services Group Leader, Family-Owned Businesses Group Leader

6 key elements of a family business succession plan

I’ve recently had discussions with several business owners about the elements that make up a solid family business succession plan. I have also spoken with other professionals about how they have dealt with this question from their family business clients. I’ve concluded the following: a family business succession plan is a multi-faceted plan. It addresses certain key issues in the business and at the personal level. And it is very rarely a formal document.

You may not have a formal, written succession plan for your business, but there are still a number of critical elements you need to consider. So based on my experience with family business clients, as well as my conversations with other professionals, here are six key areas your family business succession plan needs to address.

  • First, make sure you address personal retirement planning. Without this step, it’s hard to know how long you may need to continue working in order to build your nest egg or how much money you can expect to have when you’re ready to retire. Going through the retirement planning process will provide you with the insight you need to answer the dual questions of “When can I retire?” and “How much will I need?”
  • Another item to tackle is personal estate planning. Understanding what assets you have and how you would like them allocated after you are gone can relieve a lot of anxiety and strife amongst family members. Effective estate planning not only fulfills your wishes and intents, but it can also preserve your wealth for future generations.
  • Few family business owners I encounter do not maintain a written emergency plan. Your emergency plan should consist of a clear set of instructions about who the owner’s spouse or other relative should talk to in the event of the owner’s unexpected incapacitation or passing. It should outline the key individuals at the company, as well as the trusted advisors on the outside, and what they have been instructed to do.
  • Reviewing and updating your shareholder agreement is another key step in the succession planning process. Make sure the agreement reflects the shareholders’ current intentions. This becomes particularly important as the shareholder pool changes when the family business gets passed down to future generations.
  • An area that is often underappreciated or overlooked is instituting more formal governance processes for the business. This includes developing a family employment policy, reviewing strategies for family compensation, and establishing a board of directors or advisors.
  • Lastly, look into developing training platforms for the next generation. This will not only help them learn about the business, but also about leadership and what it takes to run a business.

Addressing these six key elements of a family business succession plan will not only improve your chances of success, but will also likely improve the long-term value of your family company.

Steven E. Staugaitis, Kreischer Miller

Steven E. Staugaitis is a director at Kreischer Miller and a specialist for the Center for Private Company Excellence. Contact him at Email or 215.441.4600.


 Subscribe to the blog

You may also like:

Contact the Author

Steven E. Staugaitis, CPA, CVA

Steven E. Staugaitis, CPA, CVA

Director, Audit & Accounting, Small Business Advisory Services Group Leader, Family-Owned Businesses Group Leader

Family-Owned Businesses Specialist, Small Business Advisory Specialist, Business Valuation Specialist, Transition/Exit Planning Specialist

Contact Us

We invite you to connect with us to discuss your needs and learn more about the Kreischer Miller difference.
Contact Us
You are using an unsupported version of Internet Explorer. To ensure security, performance, and full functionality, please upgrade to an up-to-date browser.