The ins and outs of inheriting a business

Inheriting a business can present an exciting opportunity to continue your family’s legacy or to even make some tweaks to ensure you leave your own mark. Before taking the reins – and especially if you’ve been a casual, distant observer – you’ll want to take some important steps to help make the right decisions for you and the business.

Consult experts to get the lay of the land

Get familiar with the state of the business and call in experts to help you decode any financial or legal documents. An outside attorney, accountant or business advisor can be helpful in developing a sense of the business’s stability and prospects for the future.

Additionally, if your situation is one in which you have no interest in running the family business yourself, a lawyer can help determine how best to manage it from a distance. Or, if you decide to sell it, the advisor can lay out all the legal and tax implications for which to prepare.

Update or create a business plan

If you’re all-in when it comes to the family business, this transition is a chance to define your vision for the future. Write a formal business plan, articulating your goals, the steps to take to achieve them, the roles and responsibilities of key management personnel, and a clearly defined succession strategy.

The business plan may include additional detail, such as operating procedures, compensation structures and performance evaluation protocols. Consider being sensitive about how you present the plan to other family members and employees, especially if they have grown attached to how things have always been done and may be resistant to change.

Open the lines of communication

A sudden death in a business and even its planned transfer can be highly emotional events and generate a great deal of uncertainty. The business’s employees, whether family members or outsiders, may be in mourning, but it is also likely they will have questions about continuity and job security. Your company’s customers, vendors and partners may be anxious about their places, as well.

Be proactive in reaching out to all the family business’s stakeholders, and share as much relevant information as possible, in a timely manner, to alleviate the most immediate concerns. If necessary, ask for patience while moving through the transition, as keeping your stakeholders connected and informed can help you pick up where you left off more quickly.

Draft a succession plan of your own

Just as you were on the receiving end of the family business, you should think about how you want it to continue should you become incapacitated. If other family members are still involved, consider meeting with all parties to discuss goals and develop a defined plan for who will step in, when transitions may occur, and which roles each member will have in the next iteration of the organization.

Strive for separation between work and family

Finally, when your co-owners and colleagues are also family members, it can be challenging to leave work behind and focus on enjoying other aspects of each other’s personalities. Make a pact to try and leave work at the office so you can fully appreciate your family ties in your off hours.

Running a family company can be a financially awesome prospect. If you’ve inherited a business and are unsure about your first step, consider talking to your banker, who may be able to introduce you to professional contacts who are equipped to assist you.