Recent Increase in Adult Children Working in Family Business Calls for More Succession Planning

There’s a trend happening with small businesses: more adult children returning to work in their parents’ companies.  Gusto, the payroll company, recently crunched the numbers and found that since 2018, the share of small businesses where an adult child of the owner works has doubled. Maybe it’s the allure of a more secure environment, the desire to be closer to family, or the result of a cooling economy. Whatever the reason, more and more adult children are finding themselves working alongside Mom and Dad at the family business. 

So, what does this trend mean for you, the small business owner? My answer, in short, is: it's time to seriously consider succession planning.

Now, I know what you might be thinking: "Succession planning? Isn't that for the big corporations?" And while those giants certainly have their own complexities, succession planning is arguably even more crucial for small, family-owned businesses. Why? Because when your business is intertwined with your family, the stakes are even higher.

Why Succession Planning Matters (Especially When Family is Involved):

Preserves Your Legacy

You've poured your blood, sweat, and tears into building your business. Succession planning ensures that your hard work doesn't vanish when you decide to retire, move on, or, unfortunately, pass away. It allows you to shape the future of your company and see your vision carried on.

Smooth Transition = Minimal Disruption

Imagine trying to hand over the reins of your company without a plan in place. Chaos, confusion, and potential legal battles are likely. A well-crafted succession plan minimizes disruption to your employees, customers, and suppliers, ensuring a smooth and seamless transition.

Avoids Family Conflict

Let's be honest, family dynamics can be...complicated. Bringing family into the business, especially without a clear understanding of roles and responsibilities, can exacerbate existing tensions. Succession planning provides a framework for addressing these issues proactively and preventing future disputes. This is where legal counsel becomes invaluable. We can help mediate and facilitate discussions that might otherwise be difficult.

Tax Optimization

Let's talk about the elephant in the room: taxes. A properly structured succession plan can minimize estate taxes and other tax liabilities, allowing you to transfer your business to the next generation in the most tax-efficient manner possible. Pennsylvania has specific inheritance tax laws that need to be considered.

Identifies and Develops Future Leaders

Succession planning isn't just about choosing a successor; it's about developing the skills and knowledge they need to succeed. By identifying potential leaders early on, you can provide them with the training, mentorship, and experience necessary to take the helm. This is particularly important when the successor is a family member. Just because they share your DNA doesn't mean they automatically possess the skills to run the business.

Don't Go It Alone

Succession planning is a complex process that requires careful consideration and experienced guidance. Our small business attorneys at Fiffik Law Group can help you navigate the legal complexities and create a plan that meets your works for your family and business. Your family is the most important thing in your life – you want to pass your business on to them to continue your legacy.  Schedule a meeting with our attorneys today and let’s get the ball rolling.