Five steps to start a solid succession plan

(NC)-The statistics are worrisome. About 70 per cent of family businesses never make it to the second generation, found a recent Grant Thornton research study. A stunning 90 per cent of family companies go bust before a third generation can take over the management of the firm. Poor succession planning appears to be the primary culprit for these dismal statistics, according to the study Finding the Right Balance.

Key concerns of a succession plan for Canadian businesses need to address these five steps:

• evaluate the tax consequences of any succession plan
  
• consider the future economic needs of the business owner and spouse or common-law partner
  
• plan the best timing for the formal transfer of ownership
  
• think about roles for key employees, including possible ownership
  
• write a relevant communication of the plan to third parties and employees
  
• consider contingency measures for emergencies such as a sudden death
  

A good succession strategy can help business owners plan, preserve and pass on the hard-earned family wealth - both financial assets and the invaluable business experience of the founding generation. Visit www.GrantThornton.ca/resources for more information. Grant Thornton LLP is a leading Canadian firm of chartered accountants and management consultants with offices across Canada.