Advivo explains how you can prepare the younger members of your business to successfully take over financial responsibilities.
As one of the leading accounting firms in Brisbane, we understand that if you run a family-owned business, you may have plans to hand over your business to the younger generation in the future when you retire. Handing the reins over to someone else can be stressful, especially if you are concerned about how your business’ finances will be handled after you are gone. To help aid you in this, we outline 5 ways you can ensure that your successors are properly prepared for this responsibility.
Education in financial literacy
Firstly, it’s important that the younger generations are taught the fundamentals of business finance. This includes topics such as budgeting, saving, investing, and understanding financial statements and invoices. Much of this education can be provided in-house, however, you can also encourage your successors to read up on relevant subjects or complete educational courses.
Mentorship and guidance
During the process of handing over your business, you should offer ample mentorship and guidance to your prospective successors. This includes providing support and constructive criticism to encourage financial responsibility, as well as effective leadership and management skills. Through mentorship, the next generation in your business will understand financial strategies, make more sensible decisions, and more easily navigate challenges.
Hands-on experience
An incredibly effective way to test-run the next generation for their financial responsibilities is to allow them hands-on experience before they officially take over operations. This way, you will be able to monitor their performance in a more controlled environment and offer them guidance and feedback to ensure they are properly trained and confident in their new responsibilities.
Encourage continuous learning
Even if you believe that you have provided effective financial education to the younger generation in your business, you should encourage them to continue learning new skills and expand their knowledge. This can help your business to continue to grow after you have handed it over. Our Monthly Service Programs are an excellent way for businesses and their next generation to develop new skills and build their confidence in handling finances.
Succession planning
As most accounting firms in Brisbane would tell you, perhaps the most important step you can take in this process is to invest time into formal succession planning. 1 in 4 Australian businesses don’t have a clear succession plan, and this can make or break the transition period between ownership. A succession plan involves creating a clear roadmap for identifying your potential successor, assessing their readiness, and implementing a structured plan to transfer financial and operational responsibility.
