| Decades of statistics illustrate that most successful | | | | refuse to acknowledge the most productive role they |
| businesses ultimately fail. In fact only 35% of | | | | can play, providing the tools and tactics available to |
| successful family businesses (and virtually all small | | | | help make the business owner's dreams come true, or |
| businesses are family owned) survive through the | | | | they assume the "not invented here" position and |
| second generation, and of those only 20% survive | | | | refuse to listen to the other members of their client's |
| through the third. | | | | advisory team. |
| The reasons are typically straightforward and the | | | | Too often, estate and business succession planning is |
| excuses have been the same, from my personal | | | | done with an eye toward the tax and financial aspects |
| experience, for over a quarter of a century. How do I | | | | only, ignoring the very important impact of family |
| define failure when taking about these successful | | | | dynamics - maybe because nobody asked the |
| businesses? Why do I say these business fail? Well | | | | business owner specifically what he or she wanted to |
| what are the options available to a successful | | | | happen. This invariably leads to plans that collapse |
| business owner when the founder or senior generation | | | | since the unspoken desires of family members will |
| of owners come to the end of their careers? | | | | serve to undermine not only the tax and financial |
| The business can be sold, or can it, as a going concern | | | | objectives but also may destroy the family harmony. |
| - but that rarely works out since the owners have to | | | | Why don't advisors address the emotional issues that |
| trust in the buyer's ability to run the place successfully | | | | are keys to moving forward with transition planning |
| enough to pay their own salaries and still have enough | | | | instead of simply concentrating on the legal issues, tax |
| left over to pay the note. Ask your accountant to | | | | issues, insurance issues, and management issues. |
| illustrate this for you. | | | | What's holding these business owners back? Isn't it |
| Or the company can be broken up and sold for the | | | | because nobody has asked them to describe what |
| value of its assets. That's unlikely to be satisfactory, | | | | they want the business to look like? They have not |
| certainly not to the employees who lose their jobs - | | | | asked them who is going to run the place and what |
| and the depreciated value of the businesses assets | | | | plans they would like to see in force for their spouses |
| are unlikely be to large enough to provide the stream | | | | and those offspring who are not involved in the |
| of income required for the retiring generation let alone | | | | business - where their entire net worth is tied up? |
| having anything left for their heirs. That's pretty pitiful | | | | Does anyone ask the business owner their opinion, |
| results for a lifetime of work, huh? | | | | what's possible given the abilities of the members of |
| That leaves the only real possibility - the continuous | | | | the next generation? Maybe if their advisors would |
| operation of the company in the hands of the next | | | | ask and then listen to the dreams and goals of the |
| generation through a process of succession that does | | | | business owners and their families they could create |
| not require a sale or other taxable event that | | | | plans that everyone will buy into? |
| diminishes the assets and the resulting income stream | | | | If the business owner knows 80% of what he or she |
| from the business. | | | | needs to know in order to create a successful |
| Business owners who have put in twenty or more | | | | succession strategy - who are they gonna call to help |
| years building their companies know that succession is | | | | them uncover them? Who's going to ask them "what's |
| their only hope. They have all seen folks try the clever | | | | important" over and over again across a range of |
| strategies to do otherwise and then ended up with | | | | issues to help them surface for themselves their |
| very little to show for their life's work. So why do | | | | desired results? As a business owner don't you think |
| these otherwise successful business owners fail to | | | | that if someone could help you articulate your desires - |
| take the steps necessary to insure that succession | | | | that you could take them to your advisors so they can |
| happens? Business advisors know that a seamless | | | | set it up? |
| succession process is the only way their client can exit | | | | If you are an lawyer, accountant, or life insurance |
| the company satisfactorily but can't seem to get their | | | | professional doing business with business owners |
| message across to them. | | | | wouldn't you welcome the insights of a professional |
| This article is for both of you. | | | | business coach who has helped your client convert |
| Everybody knows that business succession planning is | | | | their deeply held feelings into words on paper you can |
| the systematic process of ownership transition, and it | | | | use to create the documents? Or are you afraid that |
| is no simple task. Maybe that's the problem, it's too | | | | the coach is going to encroach on your propriety turf? |
| complicated for business owners to understand? By | | | | What's more important to you - being in charge of the |
| now, if you have been around a while, you know that | | | | process and keeping all others at bay, or taking all the |
| business succession planning is not a one-shot event, | | | | help you can get to insure that the resulting business |
| but requires everyone's commitment to review and | | | | succession plan achieves the desires of the business |
| revise. What, did you get bored thinking you could sign | | | | owner? |
| a paper and keep on with business as usual? | | | | And finally, if you are a business owner you are the |
| Needless to say, business succession planning can | | | | one with the power, the authority, and the responsibility |
| bring about peace of mind and it also protects | | | | to yourself, your employees, and your family for the |
| unprepared family members from decisions connected | | | | ultimate success or failure of your succession plan and |
| with owning, selling and managing the family business - | | | | the financial future of your family. If your advisors |
| so what's the problem, why don't you do anything | | | | won't actively seek help of others, if they are |
| about it before the good options are taken away from | | | | determined to do "it" their way and you don't fire them, |
| you? | | | | the possible tragedies to follow are your responsibility. |
| I have learned over the last thirty years helping | | | | You can blame whoever you want but that won't |
| successful family owned companies re-design | | | | change the fact that it is your responsibility. Will the |
| themselves for the future beyond the current | | | | future be the time you'll be happy with the decisions |
| generation, that business owners already know | | | | you make today, or not? Who's in charge of your |
| 80-90% of what they need to know in order to have | | | | business succession process? Who is going to have |
| a successful transition to the next generation. | | | | to live with the outcome? You know the answer, now |
| Advisors often fail to serve them either because they | | | | it's time for you to do something about it. |