The information from this article is based on an interview with Jason Cummings from RBC Merchant Bank (Caribbean) Limited, on the Straight the BATT live show.
If a key family member passes on unexpectedly or decides to leave the organisation, the business must stay steady during the transition. As the family business deals with the stress of change, a comprehensive, well-thought-out plan can assist to provide stability. Therefore, defining when family members can engage in the business, how earnings are dispersed, who serves on the board of directors, and how to plan for next generation leadership are all important aspects of building a long-term legacy.
Previously on the Bankers Association of Trinidad & Tobago’s live series, “Straight off the BATT”, our host, Pauline Joseph discussed the importance of succession planning and business continuity for family businesses in T&T with Jason Cummings. He is the Vice President – Financing Specialists at RBC Merchant Bank (Caribbean) Limited.
Here are the top three (3) things you should include in your succession plan for your family business:
- A Formal Policy Statement
Ideally, this document should clearly state that in the event of the business owner’s departure, an identified individual – be it another family member or otherwise -will take over the reins of power and continue the business’ operations.
- Outlining How Assets & Liabilities Will Be Treated
Clearly outlining how the business’ assets and liabilities will be handled can potentially reduce or eliminate any ambiguity or source of friction. This way everyone will know their role and function in the business continuity process.
- How Will Current & Future Profits Be Distributed?
Profitability and profit-sharing plans should be included in your succession plan. This would guide the persons who are enforcing the business continuity process to properly acquire and disperse the profits the business generates.
Cummings suggests that a major part of succession planning includes the engagement of important stakeholders to your business such as your Accountant, your Attorney and your trusted Banker to map out a clear plan for future business operations in your absence.
If you would like to learn more about succession planning for your family business, check out our video below:
This article is based on a discussion with Jason Williams on the Straight off the BATT Live Series from the Bankers Association of Trinidad and Tobago. The show aims to help you understand financial literacy and education. Join our mailing list, here.