At its core, the question of who to nominate as successor relies on the business owner determining the right time for them to stop so that they can embark on a new chapter in the final part or parts of their life. Reaching that turning point ought to be predicated upon the business owner having something else to occupy them once they relinquish their day-to-day role in the business, even if that means retaining some level of emeritus position such as chair of the board or president of the company.

For some, their business is so particular to themselves that the issue of succession planning simply may not be relevant. For others, succession planning presents an array of complex and emotional issues; an example might be where a business employs a large number of people and has a multi-million-pound turn-over and a life beyond that of the owner. For those who are parents they may then see the business as their legacy – one they’ve developed from scratch or had passed down to them from the previous generation. In the latter case, succession planning is a relevant concern. But what if the successor you have in mind isn't ready to take over the business?

Whatever prompted your decision to start planning the succession of your business, wondering whether it’s a good idea to pass the business on to the family, or a third party, is a reasonable concern. The answer could be debatable. The decision will depend on, considering you do have family to pass the business on to in the first place, whether the next generation possess the right skill-set, because you’ll want to avoid handing down a poisoned chalice and seeing the value of the business destroyed or your family’s outlook on life harmed.

Your intention will be that it’s an opportunity to be a life-enhancing experience, not a noose around their neck. Clear alternatives are to sell the business to a third party or to close it and sell its assets and customer database. No matter which way you proceed, it’s still a personal decision.

If your successor isn’t ready to take control of the business, the solution could be to appoint someone outside of the family, a third-party, who can run the business. In the interim, your proposed successor can understudy them for a number of years until they are ready to assume leading the business. Handling this with sensitivity and respect to the de facto leader is key to generating results – it wouldn’t be ideal to appoint an acting CEO simply to force them out some years later when your child or chosen successor is finally ready to step into your shoes.

If an interim appointment is in contemplation, financially rewarding them will be a key element to their success.  This might be through an annual bonus scheme, or more probably a long term incentive plan that whilst might not include equity in the business, could include a phantom equity scheme where a bonus is paid at the end of the appointment based on the increase in the value of the business over their tenure.

Who you choose as your successor remains your decision, but consider carefully whether they’ll ensure that your values will continue once you move away from the business.

CASE STUDY: Upside-down

John Timpson, founder of the eponymous chain of 2,000 Timpson stores across the UK, handed control of his empire to his son, James, in 2002.  James continued his father’s well-known ‘upside-down’ style of management, which has been key to the growth of the business. In July 2024, James gave up his role in his father’s business to become Minister of State for Prisons, Parole and Probation in the newly elected Labour government.

The approach – or response – to who will get your money when you die will vary depending on your individual circumstances. The factors you will need to consider when choosing a successor – and evaluating whether they are ready to take control of the business – include their relationships, dependencies on others, individual responsibilities, their developing maturity, and the accumulation of wealth. Perhaps now is the time for you, having already achieved everything you have thus far, to ask your-self, ‘What do I want?’ and if that includes a continuation of your business but your chosen successor is not ready, then an interim appointment might be a sensible way forward.  It is one where you can take more of a back seat, but nonetheless stay involved providing that guiding hand until your chosen successor is ready to take over.