It's Your Money  

Passing biz to your children

Child taking over family business

It’s almost time to pass on your family business – but is your family ready to take it on?

There always comes a time where you need to hand over your business to someone else and in many cases, business owners want their children to take over.

This can be an acceptable exit strategy, but that son or daughter may not have the same expertise as an outside person that you could have sold the business to.

Part of the succession planning process then, isn’t just to choose a new owner. It’s to also make sure that the family member you have picked knows enough to take the business into the future.

Here’s how you can make sure they get up to speed.

Have them work elsewhere first

Experience is important in the corporate world, yet many family members never work outside of the family business, and that can be a mistake.

The more business experiences a child can rack up, the better it will be when they eventually take over.

Talk about weaknesses

It may not be an easy conversation to have with a son or daughter, but it’s important to speak openly about what the future owner can improve on.

Discuss your successor’s weaknesses and what experience, training and/or education they will need before taking on their new role.

Share inside information

If your family member is not yet in the know about every aspect of your company from financial performance to business processes, they need to be. Show them where every dollar goes and how the business runs.

As well, introduce the soon-to-be CEO to your clients, suppliers, and other business contacts.

Let them be your shadow

If you want your child to take over the business, you probably like spending time with them. That’s good, because the more they can hang around and watch what you do, the better.

Have them shadow your every move for a few months, if not longer.

Have them share their vision and set objectives

Before you say goodbye, make sure your child has a plan for the future. Work with your successor to ensure that they have a vision – and be prepared that they may not have the same vision as you.

If that’s the case, ask them to tell you about their vision and how they plan to implement the changes.

Meet with your financial advisers, lawyers and accountants to make sure that your company is structured properly for the future.

Talk to staff

Part of preparing a successor is also making sure the staff buys into the change. Make sure your employees are aware of the transition in leadership that will take place and ask them to be involved in the process.

As a business owner, it can be incredibly rewarding to see your family business transfer to the next generation successfully.

To ensure your family business can thrive after the succession takes place though, make sure you take appropriate steps well in advance!


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About the Author

Brett, designated as a chartered investment manager and certified financial planner, is the regional director (Okanagan) for IG Wealth Management.

In addition to his “day job," Brett was appointed to the board of directors of FP Canada (formerly FPSC) in 2014, named as the board’s vice-chair in 2017 and took over as board chairman in 2019. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FP Canada board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected]

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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