by Dave Driscoll
Why you must start thinking about your future now to Ensure your “Life beyond business”
All business owners know they need to plan for the eventual, inevitable transfer of their businesses. Every owner is also extremely busy with the day-to-day operations of the company. So, to use a well-known phrase – “WIIFM?” Or “What’s in it for me?” – as a motivator for action, I offer these six reasons:
1. Minimize taxes. The time to plan your succession is well before the actual planned implementation date. To minimize the taxes paid upon transfer, many tax advantage strategies must be in place well in advance. How much of your life’s work do you want to give your partner, the U.S. government? This reason for succession planning hits you directly in the pocket!
2. Decrease risk of not meeting goals. Every owner has a miniseries that plays in the back of their minds: What can I do when I no longer want or need to work? Your dreams don’t suddenly become reality when you leave your business. Decide what you really want from life and set that as your destination and goal. Start taking steps toward that destination now. Without conscious thought and real planning, you are unlikely to reach your goals (just like in your business).
3. Reduce the chance of losing options. As with tax minimization, the longer you wait to begin the succession planning process, the more precious options you lose. Don’t sacrifice your ability to attain your goals, quality of life and profit by procrastinating instead of planning.
4. Avoid losing control of the outcome. Show me a business owner and I’ll show you a person who likes to control outcomes. It’s just who we are! This is your succession plan – drive the bus; don’t be a passenger just waiting for the last stop. Advanced succession planning allows you to control what happens to your business and your future. You will gain peace of mind that the eventual transition is in the best interest of you, your family and your business.
5. Protect against the lower value if the owner dies/becomes disabled without a plan. Without a captain at the wheel, the business can be on autopilot for only a very brief time. With you gone, the business’ stakeholders will need direction and communication. Confusion, infighting and egos will decrease the value of the business while your heirs are most vulnerable. Don’t hand your business to your competitors on a silver platter at the expense of your loved ones.
6. Eliminate corporate hygiene issues that are decreasing company profitability and value now. The business management, policies and procedures are important determinations of value. I call it the chaos meter: Are executives and employees bouncing from one critical issue to another with their hair on fire? Are there risks lurking on the margins? Are clients “delighted” with company performance? Does the business consistently deliver quality on time? What is your chaos meter telling you?
These six reasons should at least get you thinking about your future. Thinking is good; it’s the first step of every process – but thinking needs to be followed by taking action. Begin chipping away at the block. Planning your inevitable transition out of your business is a large undertaking that cannot be accomplished alone. Having advisers who have “been there, done that” is critical to your success. You need the advisers’ objective guidance to balance your emotional attachments. This is not the time to be trapped by feelings or others’ expectations surrounding your succession. Your success(ion) is about your future … your “Life Beyond Business.”
Dave Driscoll is president of Metro Business Advisors, a mergers and acquisitions business broker, business valuation, and succession planning firm helping owners of companies with revenue up to $20 million sell their most valuable asset. Reach Dave at DDriscoll@MetroBusinessAdvisors.com or 314-303-5600. For more information, visit www.MetroBusinessAdvisors.com.
Submitted 9 years 82 days ago