If you run a family business in Canada and do not take the time to perform formal succession planning, you are not alone. In a 2014 Deloitte Family Business Survey* that questioned 120 family-owned businesses in Canada, only 17% of the companies surveyed had an official plan in place relating to what would happen to their business if the head of operations passed away.
This survey also discovered that approximately half of the businesses that participated had an informal plan in place. However, if you have only informally started succession planning, this likely won’t benefit your business in the future and isn’t really considered a pan.
Without properly planning for your business’ future, you could compromise its operations and leave your family members in a difficult position. For example, when the chief engineer of CANA Construction, Jack Simpson, bought out the company’s founders, he never designated his own successor. Instead, when he died at the age of 64, he left a perfect tax plan for his estate, but left his own son, who had worked at the company for the majority of his life, in a vulnerable position.
Although Jack Simpson’s son ultimately ended up becoming the company’s successor in the end, he had a dispute with his sister over what would happen to the company. As a result, the man who is now head of CANA Construction annually updates a succession plan for his children.
If you own a family business, succession planning is a process that should be a priority for your company. For assistance with this process, give us a call at BlueRock Wealth Management Inc. today.
*”Too Many Family-Run Businesses Have No Plan for the Next Generation. “Canadian Business. N.p., 17 Sept. 2014. Web.