|Listen to this Radio Show
I was reminded of the topics we covered two years ago through a number of conversations with Financial Planners. Two things stuck out in terms of their frustrations, especially with business owners.1. Clients don’t want to reveal all their assets the planner2. Clients will “dither” on the end game. Some listeners will be thinking, rather skeptically, about the self interest motivating such frustration. But, for a minute, most financial planners are well motivated and they can’t build a book of business by not doing two things really well:1. Know their clients really well2. Act in their best interests
|“May you live in interesting times” Old Chinese curse. Readers don’t want another recital
of the recession litany. Yet, there is opportunity in any downturn.Yes, conditions are unpleasant with loads of “turbling” BUT….
|That’s easier said than done, in this economic climate|
|Oh, I am not talking about easy but I am talking about the need to be proactive…
Since the recession started, for Baby-Boomer business owners face the same dynamics of their condition.1. 78m Boomers of whose wealth is held in 12m privately owned businesses2. 70% will change hands in 10-15years3. Trillions of dollars will transferNow think of the business owner with 180,000 hours, say, invested in their business;
What are they thinking?
|Why not combine the two?Expand strategy to accomplish both – the reality is they are not mentally exclusive.
In fact, there are real problems if you don’t keep them integrated.Remember the quote “keeping your head”
This is not the time to abandon business planning.It takes at least 2-3years to successfully implement in NORMAL Times. You can argue now
is the right time to put in place tactics that will increase business value when the recession ends.
|Well, the business cycle is alive and well, there’s still timing when you business is at its optimal value.
The fact is that less than 40% of businesses successfully transition their business…. Yet,
There’s been no change to owners lack of urgency:
|When are owners thinking of exiting their businesses?|
|28 % within 5 years, 52% plan on exiting within next 10 years.
Like retirement and personal planning, transition planning works best the longer the timeline to plan and
implement = optimal value.
|With such compelling stats for just how much is on the line, what’s holding people back?|
|There are the three fears of transition:
|What are the main reasons for not having a succession plan?|
|It’s a bit like Letterman’s Top Eight Reasons (Excuses) for not getting the right return on 180,000 hours of:
8. Too scary
7. Thoughts of the end
6. Family/Employee conflict
5. Don’t want to think of leaving
4. Can’t get adequate advice
3. Too complex
2. No Time
No. 1 – No time to plan!
|In this recession why has transition planning become even more important?|
|Good question,There will be more market competition – fewer buyers than sellersWith downward pressure on business values a premium will be placed on well run businesses that stand out
from the pack and can differentiate themselves in the market placePlanners – IO Non-Planners – O Which team do you want to be on?
|Well. Many owners consider passing their business on to their children,It’s one of the most challenging
decisions a parent-owner faces.Impartiality is critical in addressing these emotional family issues and the effects on the business
|Sadly, many family-owned businesses are shut down because the Family didn’t handle the succession issue: Why?
The reality is that the odds are not stacked in their favor:
30% – 2nd Generation survival
12% – 3rd Generation survival
3% – 4th Generation survival
|My Blog Tip|
|Ask Yourself:What comes first? The Transaction?OR The Management of the Transition?OR The Strategy for the TransitionDon’t put the Cart before the Horse.Talk to your trusted advisor – CPA, Lawyer etc. and ask”Who do we need to create and implement the plan?
Great, but how can this help me?
This is probably the first thing on your mind after reading this Blog.
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