CMC Partners offers basic advice to prepare your firm for the future.
As part of Professional Jeweller’s February issue, we took a closer look at succession planning in the jewellery industry. UK company CMC Partners shared its top tips to kickstart planning for your business’ future and ensuring you select the right people for the job.
1. Plan early for your succession
Five to 10 years before retirement will help make it easier. The longer you get to spend on family succession planning, the smoother and more successful the process will be.
2. What’s next
Those departing should plan other activities to help them lead a fulfilling life and ‘let go’ in retirement. Ask yourself what are the needs of your spouse? Is a family succession the best option or would selling the business be a better option?
3. Communicate and involve your family
Where possible, involving family members in succession might be the best way to begin the process. Encourage your children or successor to ask questions such as ‘what would an efficient succession plan look like to you?’ or ‘what difficulties have you had running the business?’
4. Create a written succession plan
Formal procedures and rules avoid tensions and conflicts during succession. A plan will ideally include objectives, choosing the successor, leadership and a development programme for the successor, plus an exit plan for those moving on.
5. Chose your successor
The first born child is the obvious choice when it comes to family-run businesses, but do they have the skills or interest? Don’t forget: another family member might be just if not more capable and willing.
6. Develop a leadership plan for your successor
Regular feedback about the successor’s performance is essential. Recognition and praise for any achievements or work will build confidence and constructive advice where needed will build on improvements. Depending on the size of the business, one to two years of working with your successor is ideal before a full handover.
7. Ownership of the business
An annual share redemption programme is another useful tool for streamlining ownership. That way, some family members can remain shareholders, providing liquidity to the company, while others might elect to sell their shares.
The minimisation of taxes upon death is another element that needs to be considered in your succession plan, especially for family-run firms. There are asset tax strategies such as freezing the value of your interest in the company while you transfer ownership to your child or children.
9. Seek help from a professional
A trusted business advisor can help take the emotion out of the succession and manage the process successfully.
CMC Partners are specialists in helping small business owners prepare for their exit, succession or sale. cmc-partners.co.uk