A little book that could save a lot of grief
According to recent surveys, more than half of business owners in North America will be reaching retirement age in the next ten years. Fewer than half of them have developed a succession plan — a situation that succession planning guru Dr. William J. Rothwell refers to as a “quiet crisis sweeping the world.” Given the fact that owner-managed businesses account for 80 percent of North American enterprise, Rothwell may not be exaggerating.
Why are small business owners so hesitant to undertake a process that is so important to their futures and to the futures of their families?
Perhaps because succession planning involves facing the realities of aging and turning over control, neither of which are very high on most people’s lists of favorite topics.
Beyond that, succession planning can seem overwhelmingly complex — thick volumes have been written on the myriad legal, financial, taxation, investment and management strategies a business owner can pursue. Small wonder that most owners ignore succession planning in favor of more immediate business problems that they may feel more equipped to address.
It is this issue of complexity that Mark Voeller, Linda Fairburn and Wayne Thompson address in Exit Right—a guided tour of succession planning for families-in-business-together. Business owners have accountants, lawyers, bankers, financial planners and management consultants who are perfectly well equipped to explain the complex options their disciplines offer, say the authors. The danger is getting lost in the details and the necessarily business-focused perspectives of their individual advisors. What most business owners lack is help in standing back from the process, seeing the forest and the trees, ensuring that the work of each specialist meshes into a consistent whole, and perhaps most importantly, facilitating the personal exploration and interpersonal communication that will allow the plan to meet the emotional needs of the owners and their families.
This facilitating function is the realm of an emerging species of consultant called the “family business advisor,” of which the authors are examples—and Exit Right is a good example of what family business advisors can bring to the table.
The value of this slim volume (118 pages) lies not in encyclopedic detail but in its “20,000 foot view” of the process. The authors devote a chapter to each of seven key topics:
· The owner and his or her spouse's vision for their future and what financially it will take to realize their dream
· Their family members’ personal visions and visions for themselves in the business
· The company’s strategic plan and the steps the business must take to support the owner and family's dreams
· How to prepare possible successors for their future roles in the family business
· Choosing the new leader
· The business and emotional issues surrounding the transfer of the company’s ownership
· And finally, how estate planning issues can impact the entire succession planning process
Each chapter identifies several key questions the various stakeholders will need to answer and the underlying issues they’ll need to address as they proceed. Each topic concludes with a series of questions to guide an exploration of the issues and some suggested action steps to move the process along.
Exit Right is not meant to replace the expert input of the various professionals to whom a business owner will turn in developing a succession plan. Rather, it will help the business owner and his or her family become a more sophisticated consumer of these professional services by providing them with a framework within which to work and by ensuring that they have considered all the relevant issues as they develop their plan. It could also be a useful tool for accountants, lawyers, insurance and investment professionals wishing to develop the “big picture” perspective of the family business advisor — or for professionals looking for a tool they can use to encourage their clients to embark upon the succession planning process.
Business owners typically spend thousands of dollars on legal and accounting fees in developing a succession plan. The money spent on this little book could go a long way towards protecting that larger investment. The time investment is also minimal — it’s a quick and easy read that could save a ton of time, effort, money and grief down the road.
To order Exit Right—a guided tour of succession planning for families-in-business-together contact Linda Fairburn at www.makethingshappen.net.