Although the backbone of Ohio’s economy is arguably small, family-held businesses, the statistics show that relatively few family businesses successfully make the transition to the next generation of owners.
For instance, fewer than 1 out of every 3 family businesses continue within the family after the first generation of business owners retires. The businesses either wind up closing their doors or being sold outside the family.
The chances of a business staying within the family get even slimmer as time goes on. Only 12% of family businesses survive as family businesses so that the founder’s grandchildren can take control of the business, and only 3% of these businesses manage to continue into the fourth generation of family ownership.
Part of the problem is that many family businesses have no clear plan for succession. What is interesting is that most owners of family businesses, close to 7 out of 10, would prefer to pass the business down to the next generation. However, over 40% of owners admit that they have no formal business succession plan in place.
Creating a business succession plan is an important component of an Ohio business owner’s estate planning process, and families would do well to pay attention to it. A solid business succession plan, when organized around one’s overall estate planning goals, can minimize the conflict and confusion that often takes place when a family business makes its critical transition to the next generation.
Moreover, a business succession plan can save the time and expense of probate and related matters that can put a strain on a business even when family members are getting along. An experienced attorney can help business owners take the first step of creating a succession plan suited for their business.
Please contact Dinn, Hochman & Potter, LLC, to discuss your business planning and succession issues at 440-681-8005.