Family-owned businesses will experience a change
1. Don’t be caught unprepared
Start thinking about this stuff now, even if you’re not anticipating imminent changes. Experts estimate more than 40 percent of family-owned businesses will experience a change in ownership in any five-year period. Of those, only four percent will have a formal succession plan in place.
“In the next 10 years, about three-quarters of boomer businesses are expected to be handed over to the next generation,” Holland says. And with each successive generation, chances of continued success dwindles.
“You need to get good advice to develop a plan and execute it properly,” says Leonard Kane, president and general manager of Len’s Transportation Group in Surrey, BC. In 2008, he took over the company that his father, Len Sr., started in 1964.
“It was a baptism by fire,” he says. “The economy turned and we had to downsize the entire operation to just a few key people.”
The company has since rebounded to field 23 trucks in the heavy-equipment hauling industry out west. Economy notwithstanding, however, the transition was relatively smooth because he and his father explored all their options and relied heavily on the advice of experts.
And he’s not done yet. He’s already looking ahead, even to the point of anticipating his own passing (though he’s only 38 years old), so his family is not hit with an unreasonable tax burden.
“Basically, you have to plan so your assets can be liquidated or easily transferred around at time of death,” he says.