The family business is now your business, and choices you make in coming months will chart the course for its success. Here are some important first steps to take.
Meet with Business Advisors
As early as possible, schedule a meeting with the company’s current team of advisors – any bankers, attorneys and/or accountants associated with the business. In this meeting, review any documents related to the organization. These may include: tax returns and statements, applicable business licenses, business balance sheet, current budget and business plan, as well as any documentation of loans, credit lines, mortgages or other debts. This meeting helps you fully grasp the current business condition and puts you on a path to establishing short- and long-term goals
Communicate with Employees
If the business has employees, make sure not to over-promise anything early on. Keep expectations realistic. Tell them you are digging into the details of the business and evaluating next steps. Keep communication lines open between you and them. You may consider holding a meeting with stakeholders and department representatives to discuss the company’s strengths.
Update the Business Plan
According to the Family Business Alliance, 30% of family-owned businesses survive into the second generation. Having a clear and updated business plan can increase the chances of the business lasting. If you are unsure where to start with your business plan, consult your business advisors.
Decide Whether to Sell
When you inherit a business, the bottom-line question is whether to maintain or sell it. If you are unsure, try the following. Conduct a company analysis. What are its strengths, weaknesses, opportunities and potential obstacles to success? Think about the company team. Do you foresee any issues working with other stakeholders? Finally, do a self-analysis. Do you feel qualified to run this business? Do you feel passionate about the work? Answering these questions may provide clarity about whether or not to sell the business.
While you have to make some of the decisions about the business quickly, do your best to think practically and control your emotions. By taking the steps above, you can make wise decisions about your newly inherited family business.
Fifth Third Bank does not provide tax or legal advice. Please consult your tax adviser or attorney before making any decisions or taking any action based on this information. This information is provided for educational purposes only and does not constitute the rendering of tax or legal advice.
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