I am Yoshida, president of Yamada Shusei Ltd., a professional apparel garment repair group in Nagaoka City, Niigata Prefecture.
"To whom should I entrust my business?"
This is an important issue in business succession. At the same time, the question of "what to entrust? is also an important issue.
Business succession refers to the transfer of a business from the current management to a successor, but it is not merely the transfer of management rights and assets; management resources and a management mindset must also be transferred. The contents of this process can be divided into the following three categories.
1) Management rights
This refers to the transfer of the representative director's position, role, and ownership of shares to a successor. It involves the selection and training of successors and the transfer of shares.
2) Management resources
This involves transferring management philosophy, company credibility, brand, know-how, technology, human resources, human networks, etc. to the successor. This involves educating and guiding the successor, and building a sense of conviction within and outside the company.
3) Physical assets
This is the transfer of the company's land, buildings, equipment, working capital, etc. to the successor. This involves drafting contracts, filing taxes, etc.
And, in general, the following are the key points of succession.
1) Planning for business succession as early as possible.
It is necessary to clarify the timing of one's retirement and business succession goals, and to plan for the selection and education of potential successors, as well as the transfer of management rights and assets.
2) Confirming the qualifications and motivation of potential successors.
When selecting successor candidates from among relatives and employees, it is necessary to confirm through interviews and evaluations whether they are interested and capable in management and willing to take over the business.
3) Management itself should teach management basics and know-how to potential successors.
Although outside consultants or experts can be hired, it is preferable for the manager himself/herself to provide direct guidance. It is also important to encourage interaction with managers of other companies and industry associations.
4) Give prospective successors practical experience.
It is necessary to train them in managerial judgment and leadership by placing them in positions such as department heads and directors. It is also effective to have them attend important meetings and negotiations to show them how managers think and act.
5) Officially announcing potential successors as successors.
Not only relatives and employees, but also business partners, financial institutions, and other related parties should be notified, as well as stock transfers and position changes.
6) Tax Preparation.
Business succession involves income tax, gift tax, inheritance tax, and other taxes. Tax planning should be done in advance. For example, tax burdens can be reduced through methods such as donation during one's lifetime and renunciation of inheritance.
In any case, I imagine that even though we know this in our heads, in reality, things are not always as they seem. That is why it is important to be prepared.