Business Decisions: Planning for Succession

Family businesses come in all shapes and sizes, from mom and pop car dealerships to ones like Seament, a global cement company run by founder Alex Bouri and his kids, Maurice, Mark, and Charles Bouri. Though the way they run their businesses and what they do might vary, there's one thing that all family-operated companies have in common: the decision of succession. If an owner should decide to pass the business on to his or her children, how would they even go about it?

According to FORTUNE, it starts with an exit plan. A business owner has to sit down with a financial advisor and come up with a comprehensive business succession which will detail the business owner's personal and entrepreneurial goals and resources. In this meeting, he or she will take into consideration the financial and legal stipulations of transferring the title of a business.

Advisors stress that business owners give the process due thought. After all, you only get one opportunity to make this move, so you have to be sure that it's exactly what you want.

The biggest decision you'll have to make: do I give the business away, or sell it to my child? The answer must be made based on your level of financial security. If you're secure enough to simply give it, take into consideration your limit of yearly gift tax exemptions. A financial advisor can look into these and see if you're entitled to discounts for giving the business as a gift.

Or, you could make an intra-family sale as a way to sell the business to your son or daughter, which involves selling the company's stock for an installment note in return.

With the proper advisor, the process is an easy one. The decision itself – how to go about it, and if you should allow your kin to take over your business at all – is often the hardest part.