by Susan Hileman, Strategic Business Advisor, NWIRC; Galliard trained Family Business Advisor
“I have no intention of ever leaving my business!” These were the words of a 52-year old business owner I recently met with. It wasn’t a flippant remark; he loves his work, has great customers, employees and doesn’t ever plan to leave. However, because none of us will live forever…eventually, regardless of intentions…he will no longer be in charge. Thomas Edison once noted, “a good intention, with a bad approach, often leads to a poor result.”
While there are owners ready to transition to the next chapter now, there are others who will continue to work in their business long past retirement age. This is particularly true for first generation owners as the business is ‘their baby’ and understandably they may be reluctant to release the reigns or step away. Financial considerations may prompt others to stay. There are also owners who simply love what they do, as well as those who can’t imagine what they would do with their time otherwise.
A problem occurs when the intention is firm, but no proper planning is conducted. Who will determine what happens to the company? Who will assume leadership of the company after you are gone? What are the gaps in skills between what you know and do—and what the next-in-command knows and does? If the business sells, will new owners want to move the business out of the area? If you hire leadership from the outside, will you lose current employees? What about voting stock, decision-making processes, and tax implications? Will transition affect sales, operations, or employee morale? What about relationships with bankers, vendors or suppliers? In essence—what risk does the business assume by not having a written plan in place?
As owner, you are in charge of the big picture. If your business is currently successful and you’d like it to stay that way far into the future, the informal plan you’ve been turning around in your head for some time now needs to be put on paper. Regardless of your age, regardless of the length of time you’ve been in business, regardless of your intentions…work with someone now to determine the best approach to maximize business profits, minimize tax issues, ensure legal issues are addressed and continue operations without disruption. This approach will provide the greatest benefit to your business, your family, and ultimately achieve the best result.
Side Note: There are upcoming workshops scheduled for 10/29 and 11/19 on Developing Your Exit Plan, however these are available ‘By Invitation Only’. Please contact Molly Reichard at mreichard@nwirc.org with questions.