You have spent a lifetime building your business.  You have spent an equal amount of time building a healthy and happy family. Now you are thinking about retirement.  The big question is whether it is time to turn over the reins to your kids.

When the business you started is in the family, it can seem like a no-brainer to pass it on, but how do you know if that is really the right choice? Succession planning is a tricky thing for every business owner.  Passing on a family business can be especially fraught. If you are thinking about passing the family business down to the next generation, here are some key factors you should be thinking about.

Are Your Kids Interested in the Business?

As the founder of a thriving business, you are no doubt passionate about what you do and proud of what you have built but do your kids feel the same? Growing up in the family business does not necessarily mean your offspring are enthusiastic about the opportunity to step into your shoes.

Keep in mind that your kids may be reluctant to share their own reluctance, and that can make for some tricky conversations. If you are thinking about retirement and eager to pass on the family business, the first thing to do is make sure the intended recipients are really on board.

You might get lucky and find that one of your kids is all in on the family business while the others are eager to do their own things. This situation means there should be no disagreements about who should or should not take the reins. If more than one of your kids expresses an interest, you will have some additional decisions to make.

Do Your Children Have the Requisite Business Skills and Know-How?

Being interested in the business is one thing, but being ready to take over the business is quite another. If your kids do express an interest in the business and its future, it is important to honestly assess their skill set, knowledge base, and other factors that could influence their future success or potential failure.

Not all businesses are the same.  Every family business will have its own unique set of necessary skills. If you run an auto repair shop, for instance, passing it on to someone who does not possess the necessary mechanical skills might be a challenge. If the potential new owner is not a mechanic but has other skills, this might work out.  A kid that learns quickly can often make up for the lack of auto expertise.  As a business owner, you know which skills will be absolutely necessary to ensure the continued success of the business.

Some business owners will set certain conditions for passing on the family business. They may, for instance, require their son or daughter to obtain a college degree first or take specific business courses to get ready. Depending on your business, you might want to consider setting up preconditions.

How Will You Determine Ownership Percentages?

If you are lucky, your offspring will show interest in the business and have the skills needed to take it over. If you are really lucky, only one of your kids will show such interest, and you can avoid any awkward conversations and disagreements.

On the other hand, you may find that more than one of your kids is interested in taking over the business, and in this case, passing it on could be a bit trickier. Even if the other kids are not interested in the business, they may still consider it part of their rightful inheritance.

In that case, you may need to have the business professionally valued. Using that valuation,  you can make it part of your estate plan. This can be a tricky proposition, and it probably makes sense to seek professional help and the advice of a good estate planning attorney.

What Will Happen if There is a Dispute Among Your Family Members?

Including the value of the business as part of your estate planning can be helpful, but it may not be enough to set all possible disagreements to rest. Disputes happen among family members, and when those disagreements happen around the family business the situation can get downright tense.

Even if you do not foresee any of these problems, it is worth thinking through what would happen and how a fair resolution could be reached. Hopefully, you will never have to put your plan into practice, but being prepared is still vitally important.

Are You Willing to Stay Involved Until the Next Generation of the Business is Up and Running?

Even if your kids are interested in running the business and you are ready to pass it on, you cannot expect the next generation to get it all right. Just think about the mistakes you made when setting up your business.  So, you might have to stay involved for a while during the transition.

Passing on the family business is not an easy thing to do.  You may need to be more involved than you had planned to be. What will you do if your plans to pass on the family business to your adult child run up against your own plans for retirement? Are you willing to stay on a few months, or a few years, longer than you had hoped, all so your child can take over the business with the confidence they need?


After working hard to build your business from the ground up, you deserve the chance to retire and enjoy all your achievements. The considerations listed above can help you pass on the family business with confidence, so the success you started can continue through future generations.