Business Succession Planning Reaches Prime Time
Did you check my blog because you have queries about business succession? Well, business succession planning issues have finally reached prime time television attention with a new comedy this season on CBS, “The Crazy Ones,” starring well-known Robin Williams and Sarah Michelle Gellar as a father and daughter team holding a long-time advertising agency, Roberts and Roberts, afloat during difficult and competitive times. Inevitably, the pair demonstrate differences in opinion and style that spark more than a few comic disputes.
Dad shows obvious discomfort in moving aside in favor of his daughter. Daughter prides herself on her independence. In one scene, as she points out to her father “this is the reason my name is on the sign.” “Oh,” replied Williams, “I thought that that was my name repeated twice.”
While the comedy is fiction, the reality is that it is not easy to transfer a business to the next generation or, for that matter, to another corporation or entity. While it has often been believed that business succession difficulties primarily concern taxes, my experience has been otherwise. Even where governments clear the way for business transfers, the emotional effect of loosening control over a business that may have taken a lifetime or even generations to build can be traumatic.
If you own a business or might inherit one, here are some issues to take into account.
- Gradual transitioning might lessen the difficulty of handing over the reins and give the newly designed business a head start. Business giants like Steve Jobs as he was coming to the end, planned ahead considering who would handle the company best as successor. In families, stock transfers over time can gradually increase the participation of the new person in charge. If more than one child is involved, roles can be developed depending on the special skills of the parties. If one child is going to assume a dominant role, then consideration should be given to how this affects inheritance overall and the perceived fairness in the family so that no one sabotages the arrangement.
- Decide whether you want the business to continue after you die or to sell. Where others are involved in the business, there should be discussion in advance regarding buy-sell agreements that often are funded effectively by life insurance. If you have children, family, or current partners who can effectively run the business, the time to discuss their involvement is now. If your children and family are not interested, you may need, even if reluctantly, to look for another party to buy. It is also not uncommon for disputes to arise related to the terms of a business plan. If these disputes are prolonged or interfere with business operations, you can hire business lawyers brisbane for legal help.
- Decide whether your business is marketable without you. Sometimes your business is primarily good will based on your unique skills and talents.When it comes to skills it also involves being smart. Being smart in the sense, being aware of spam calls.It is easy to report the spam issue to collectiveray as it is designed for that purpose. Sometimes it has great value or perceived value even if you are not around.
If you want to sell your business, you want to stop yourself from being indispensable.
In an interesting short on-line article, “How Do Strategic CEO’s (and Owners) Work Themselves Out of a Job?” www.thiswayoutgroup.com, Kerri Salls makes the point this way:
“When you want to sell your business, you want to command the highest possible value. For your business to merit the highest possible valuation, you must prove to the business appraiser and your prospective buyer that the value is in your business, not in you the owner…”
Salls goes on to note that the skills involved in divesting yourself of your business are very different from the skills involved in startup. During startup, the business owner does anything necessary himself or herself to make it work. Here is what Salls recommended you do if you want to sell.
- Create systems for everything. If you have systems, make sure they are documented.
- Delegate everything. When your business can operate day-in and day-out without your hands-on oversight, you have a money making machine that will attract buyers…This one change takes time…Identify the three things you absolutely love to do in your business and the three things only you can do. Delegate the rest…
- Develop a succession plan throughout the company…
- Plan for scalability….”
Scalability is an interesting concept. It means that the potential buyer sees vastly increased revenues without increased investment of time and money. If you have it all there, you might be ready, with some additional business and tax advice, to sell.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.