Supporting Older Family Business Owners in Stepping Down
Collaborative Post
There are approximately 4.8 million family businesses in the UK. The majority of businesses in the private sector are family businesses.
Transitioning from being actively involved in a family business to stepping down can be a significant and emotional journey for older family business owners. However, with the right support and strategies in place, this transition can be smooth and beneficial for both the business and its founders. In this article, we’ll explore key steps to help elderly family business owners gracefully step down from their day-to-day activities while ensuring the continued success of the business.
Recognising when it’s time to step down
The first step in this process is recognising when it’s time to step down. Signs may include declining health, a desire to pursue other interests, or simply feeling ready to pass on the torch. It’s important for both the business owner and their family members to have open and honest discussions about this transition.
Hiring outside help
Instead of solely relying on family members to take over the business, consider hiring outside help. While family members bring loyalty and familiarity, hiring non-family professionals can seem like a difficult decision at first, but it is a game-changer. Businesses that stay within the family can sometimes struggle in the long term.
Bringing in outside help can be the wind of renewal family businesses need to navigate the transition of elderly owners stepping down. One of the primary benefits is the fresh perspective that non-family professionals bring to the table. Their unbiased viewpoint can inject new ideas, innovative strategies, and a broader vision for the future of the business. Besides, you can hire individuals with specialised skills that can address areas of weakness in the current business. Ultimately, hiring outside the family can not only help a family business expand further but also prevent a lot of issues that can arise when relatives inherit a business without having the necessary knowledge.
Securing a regular income
Senior family business owners may worry about their financial security after stepping down. One way to address this concern is through dividends. Dividends are payments made to shareholders from the company’s profits.
By retaining ownership in the business, retired owners can continue to benefit financially through regular dividend payouts.
It’s essential to ensure that proper tax planning is in place, especially when receiving dividends. Consider enlisting the help of a financial adviser or accountant who can manage self-assessment tax return and ensure compliance with tax regulations.
Maintaining a presence in the business
Even after stepping down from day-to-day operations, older family business owners can still maintain a presence in the business. There is a big difference between having to step down because managing a business 24/7 is too physically demanding and not being involved at all. Knowledgeable, passionate, and still mentally fit family business owners can keep an advisory role, attending key meetings and participating in strategic decision-making processes.
This is the best of both worlds for retired owners, who can offer valuable insights and guidance while still enjoying a more relaxed lifestyle.
Stepping down from a family business can be a daunting prospect for elderly owners, but this can be a unique opportunity for a successful transition period for everyone. This can be a new chance to expand the business as well as a chance for seniors to enjoy the benefits of having set up a business.
