July 17, 2013

By creating a succession plan, a business owner can determine what will happen to his or her business once he retires, becomes incapacitated, or dies. Often, succession plans can mean the life or death of a family business. A recent article discussed the story of clothing company Bari Jay, which was passed on to the owner’s daughters without the benefit of a succession plan.

The article profiles Susan Parker and Erica Rosenberg, who are co-owners of Bari Jay. The two sisters became owners of the business suddenly when their father unexpectedly died. According to Parker, their father never even informed them that they would be inheriting the business. Moreover, the sisters did not work at the company at the time of their father’s death.

The sisters faced many problems when they took over the business. Not only was it in the red, but they also lost a key employee who was not willing to partner with the girls. Rumors quickly spread around the company that, soon, it would no longer exist. Although the transition was rocky, the business continues to thrive. Too often, however, this is not the case.

If you own a family business that you plan to pass on to your children, take time to create a succession plan. Be sure to discuss the succession plan with your heirs, as well.