If your retirement is approaching, it’s time to consider who you may choose as a successor. It can be a daunting decision because of the amount of trust that you are placing in the person you choose. If you run a family business, it is important to separate your opinions as a family member from your opinions as a business person. Consider these tips while you are trying to decide who to choose as a successor for your small family business.

Decide What You Need

First and foremost, you need to explicitly outline what you are looking for in a successor. Think about the qualities that someone would need to be able to continue building the business. Consider possible challenges that the business may have in the future and who would be most capable of handling them. It is a good idea to lay out possible candidates at least five to seven years before you retire. Having a clear idea of what you need will make it easier for you to determine who the best successor for your business is when it is time to choose.

Be Transparent with the Family

Throughout the existence of your business, conduct meetings with family members that are involved in the business. Discuss company goals, strategies, and any other important matters. This is a great way to gain a better understanding of what the company needs and ensure that everyone is aware of each person’s thoughts on the future of the business.

Get a Shareholder’s Agreement

If you decide to split your company equally between multiple companies, you should get a shareholder’s agreement. Without an agreement in place, the company could be seriously affected if one of the shareholders ever wants to back out.

Do Not Assume Anything

Some people assume that one of their children will automatically be good at running the business. Assumptions such as these can be devastating for a company if the daughter or son turns out to be inept. It is important to take a step back and look at each potential candidate objectively. If you need to, you can hire an interim leader until one of your children is ready.

Give Every Candidate a Chance and Rotate Their Responsibilities

Even if you have someone already in mind, give each candidate a chance to prove that they are capable. It can be helpful to rotate the responsibilities that each has. This will give you a more well-rounded idea of their abilities. Not only will this strategy give you more information, it will improve each person and create a stronger management team for your company.

Explore Outside Perspectives

It can be difficult to separate your emotions about family members from your decision. It is important to talk to advisors outside the family for honest, unbiased input. They will be able to shed light on the situation, making you aware of factors that you had not previously considered.

Hold Individual Meetings with Potential Candidates

Once you have decided on a handful of potential candidates, talk to them each separately. Thoroughly discuss the responsibilities of the job and what will be expected of them if they get it. Pay careful attention to their overall temperament in the meetings. You will want to have a good idea of each person’s tendencies and demeanor before you make a choice.

Work with Your Successor for a Smooth Transition

Once you have made your decision, work closely with your chosen successor and guide them through their new responsibilities. Help them feel more confident in their new position before you leave. This may take time, so be prepared to be patient with the transition.