If you are a business owner, you probably think about employees, customers, vendors, revenue, and profits on a daily basis. Any one area could keep you on your toes each day, right?
With so much to think about and do, who has time to think about an exit strategy? That’s the last thing that most owners think about. “I’m not going anywhere.” “I have a long time before I retire.” “I like what I’m doing; I’m not thinking about retiring anytime soon.” “After running my own company, I don’t know what I’d do.” These are common statements I hear from business owners.
But I also see the other end of it, such as when an owner gets divorced and that owner’s stake in the company has to be divided (or sold) as part of the divorce proceedings, creating a hostile environment. There is also the situation when an owner passes away suddenly and no one really knows what to do with the business or there are disagreements over who is capable of managing the business.
Not only have I worked with many private and family business owners, but I have also been involved with my own family’s business, Consolidated Pension Consultants. This is where I learned first-hand from my dad how to motivate a team, how to cold call, how to provide customers with the best service possible. It was amazing to see this man not only as my father, but as a mentor. Although I learned many things from my dad, I also learned a lot by seeing how businesses handled the transition from one owner to another. Some went smoothly; others failed miserably.
In the middle of this mentoring, it was my turn to join the Army (my draft number was ‘6’). While I was in the middle of my tour of duty, my dad passed away suddenly. His death was a shock to everyone. Because of great pre-planning, the family business had a written exit plan between my dad and uncle, who was a co-owner of the company. At the time of my dad’s death, my mother sold her inherited stock to my uncle, giving him full control of the business. The company’s employees and customers were comfortable knowing that the leadership of the business was in place and undisputed. With the proceeds from the sale of that stock, my mother was more than able to raise my younger siblings and support them through college. Though this adversity, it turned out to be a win-win between my uncle and mother, with no disputes.
When I finished my tour of duty a couple years later, I came back to the family business where I continued to be mentored by my uncle. I experienced first hand changes to our business, and saw changes happening to other family companies. As the generations continued to get older, the younger generation began to take more control of their respective businesses. Again I saw some of those businesses successfully transition to the next generation, while others did not.
After launching my own advisory business, I knew that there was a need for my clients to start forming the exit/succession strategy to strengthen their businesses. This planning needed a collaborative approach in order to be successful for both the current and future stakeholders. Not only did we counsel our clients on pension and profit sharing plans for their company’s employees and management team, but we also provided estate planning assistance to these owners. I took a very personal approach with my clients, who didn’t always know what their retirement future would look like.
Especially when a company has multiple owners or if you are an owner of a family business, you need to participate in the succession planning process early in the business life. This plan should be revisited every few years as the business expands, partners or other family members enter the business, or there are other major changes to the business. Vary rarely have I found the original plan to be permanent throughout the life of a business.
My exposure to a variety of circumstances throughout my career helped me to see that having a comprehensive succession planning strategy was critical for a business. I lived through it at my family’s firm, as well as my own company, where I groomed my youngest brother to manage and eventually own the company. My years of personal experience has taught me a few valuable lessons; it’s about letting owners fulfill their entrepreneurial dreams, plan for the future with their family members and co-owners, and face the challenges while thinking about the endgame.
Even a temporary plan for ownership and management succession is better than no plan at all. Having a succession plan in place builds the business owner’s confidence that their legacy will be sustained. I can help them make that happen.
I assist business owners with putting a solid succession plan in place in case something happens to them or their business partners. I provide balanced advice so senior management can understand the ramifications of different scenarios and can choose the right plan for their business.
Contact me to learn more about my succession planning and business continuity services.