Small Business Owners
How to Ensure Your Business Survives You
Running your own business is tough enough without having to think about what happens after you're gone. But here’s the thing—if your small business matters to you, especially if it’s family-run, you can't ignore succession planning. It’s not morbid, it’s just sensible.
Why Small Business Succession Planning Matters
Here’s the reality: without clear planning, your hard-earned business could quickly collapse or get tangled in costly legal battles. Problems arise because:
Bank accounts and contracts become inaccessible without clear authority.
Customers and suppliers lose confidence if there's uncertainty.
Family members may disagree or struggle over who takes control.
Significant inheritance tax (IHT) bills could cripple the business financially.
Let’s look at how you can avoid these headaches, step-by-step.
Step 1: Choose Your Successor
Be clear about who’ll take the reins. It could be:
A family member—perhaps your spouse, child, or other relatives.
A trusted employee or management team.
An external buyer or partner who understands your vision.
The earlier you choose, the smoother the transition will be.
Step 2: Write It Down
Verbal agreements don’t hold much weight when you're gone—clarity is essential. Here’s how you get it sorted:
Clearly document your successor choices in your will and in your company’s articles or partnership agreements.
Establish a clear Shareholders' Agreement (if you have co-owners), specifying what happens to your shares on death.
Consider putting business-specific assets into a trust, ensuring clear instructions and protection.
A solicitor experienced in family businesses is invaluable here. It might cost a bit upfront, but it’ll save a fortune later.
Step 3: Organise Financial Control (So Everything Doesn’t Grind to a Halt)
If your business bank accounts or contracts are solely in your name, access could be frozen upon your death. To avoid this:
Add a trusted family member or senior employee as a signatory on key accounts.
Ensure key contracts aren’t exclusively tied to you personally—build in redundancy.
Step 4: Plan for Inheritance Tax (IHT): Protect Your Family’s Legacy
Inheritance tax can cause serious cash flow problems, potentially forcing a sale of assets. But good news: there’s help available.
Business Property Relief (BPR):
Most UK family-run businesses qualify for generous tax relief—up to 100% exemption from inheritance tax if certain criteria are met. The business must typically be actively trading (not just investments or property holdings) and unlisted.Note that from April 2026, the relief will be reduced from 100pc to 50pc.
Gifting shares in your lifetime:
Gradually gifting shares to family can help ensure continuity and reduce future tax liabilities—provided you survive the gift by seven years.Life insurance:
Consider life insurance policies written in trust specifically to pay any potential IHT bill. This ensures your beneficiaries don’t have to sell the business just to pay the taxman.
Step 5: Keep Operations Running Smoothly (Even When You’re Not There)
Document your processes clearly—think of it as your “business manual”:
Passwords & access codes: Keep securely documented, so trusted successors can access critical information swiftly.
Customer & supplier details: Maintain organised, accessible records.
Financial & tax records: Clearly filed and easily found.
The easier it is for your successor, the less disruption your customers will experience.
Step 6: Talk Openly to Your Family and Employees
Don’t spring surprises. Have clear conversations early about your plans. Ensure everyone knows their roles, responsibilities, and what to expect. It reduces misunderstandings, resentment, and stress down the road.
Special Considerations for Family Businesses
Family businesses often mix personal relationships and business responsibilities—things can get emotional quickly. Here’s extra advice specifically for family-run firms:
Neutral adviser:
Consider involving a neutral third-party adviser to mediate sensitive discussions. Accountants or solicitors specialising in family businesses can help navigate emotional waters.Family Charter or Agreement:
This lays out clearly how family members engage with the business—roles, expectations, how decisions are made, and how disputes are resolved.Training successors:
Gradually involve successors in management to ease transition. A clear plan ensures continuity and capability.