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Case Study – 50/50 Partnerships Impact Business Decisions

Industry: Franchise

Company Overview: First generation, multi-unit and multi-brand business across several state lines

Challenge: 50/50 first generation business owners. One partner actively involved in the day to day operations, while the other has become less active, yet very much involved in overall business decisions.

Second generation family members and a few “friends of the family” are becoming interested in the business. The partners have different opinions about the strategic direction of the business, compensation plans based upon their contributions, and the appropriate way to integrate and develop family member employees in the business. Partner conflict is impacting teamwork and performance.

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What Should I Do If I Have More Than One Qualified Successor?

First, consider yourself blessed. The majority of businesses I have encountered do not have an available, capable or committed successor. On occasion, I encounter situations where there are multiple potential successors who appear to have the capability and passion, but lack the experience. The best advice I can give you is: do not make a hasty decision. Ponder it for awhile.

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1557 Hits

5 Steps to Streamlining Your Business

Another initiative that, in my educated opinion, has the ability to set your company apart from the competition is streamlining your processes. Nobody, but nobody, likes to be told how to do their job. This is why this issue sets organizations that excel at it apart. Standard operating processes lay the foundation upon which an organization that desires long-term sustainability can build. These processes are not intended to be constraining. They are intended to provide the parameters of operation, like the banks of a river. When the water remains inside the banks, it’s powerful and productive. When it overflows those banks, it’s powerful and destructive…and very messy!   

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Setting Boundaries: How to Avoid Family Business Entanglements

A principle I'm reminded of on a daily basis is: “It is far easier to get entangled than it is to get untangled.” If you've ever tried to unravel a tangled up web of string you know what I'm talking about. Entanglement almost seems to be an effortless exercise whereas untangling can tax even the most patient of personalities.

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Operating Your Business Like it’s Always For Sale

In early October, Berkshire Hathaway announced it had agreed to buy Van Tuyl Group, the nation’s largest privately held auto dealership group. Warren Buffet, having dipped his toes into the automotive industry by taking a stake in GM, sees the opportunity to replicate Van Tuyl’s success by consolidating dealership groups throughout the Sunbelt.

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Bulk Up and Charge Up - How Vacation Can Reveal Your Business' Bench Strength

I recently wrote an article about managing one’s business as if it were always for sale. One of the key points was getting management proficient at running the business successfully in the owner’s absence. But what about management’s absence?

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Planning Techniques

“Is there anything your father should have done that he didn't regarding his estate planning?" "Yes" said the son...

That question was posed by the father’s original dealership partner (now in his 80’s) to the son several years after the father’s death at a meeting in which I participated. The son, who is a highly successful auto dealer, was very emphatic in his response. “Dad was unwilling to do anything because he thought he would be losing control. We were lucky – the timing of his death was during good market conditions when our dealership products were hot and the real estate market allowed us to sell assets needed to pay the estate taxes. We could have lost everything!” 

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Living in Dad's Shadow - When Kin Can Cash In

"I love coming to work every day!” exclaimed the 81- year old dealer. No doubt and he definitely still had plenty of gas left in his tank! Energetic and mentally sharp, his idea of “retirement” was to come in to work at 10:00 a.m. (“but I stay at least until 5:00 p.m.”). As the founder of his dealership empire, he was extremely proud of what he had accomplished and still felt he could contribute and run the business if he had to. So what’s the problem? 

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2014 Hits

Successor Development: 5 Key Indicators for Evaluating a Successor

If multiple successor candidates are available, it is important for you as the business owner to objectively approach selecting the successor leader. To evaluate the candidates, you can use what I refer to as the 5 C’s, which are five key traits your ultimate successor should have. 

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2424 Hits

I Love My Kids Equally but They Don't Produce Equally

“How do I resolve this issue? If I don’t address this, there will be a mess after I’m gone, but if I open up this can of worms, my life may be hell and my family will be in a uproar.” I asked this frustrated dealer if he was paying his sons the same amount and not surprisingly he said, “yes”. “Do they own equal amounts of stock?” Again, the answer was “yes”. Clearly he had identified the problem but did not know how to resolve it. In almost 25 years of working with car dealers, I have heard this story retold many times. Why? What is the impact upon Succession Planning? 

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How Do I Motivate My Children to Choose a Career in the Family Business?

I am commonly asked "How do I motivate my children to choose a career in my business?" Motivation is the ability to influence others to take action. Exterior influence, both positive and negative can generate short-term influence. However, as soon as the source of the influence is no longer present, the motivation begins to dissipate. My belief is that you cannot genuinely motivate someone. Your best hope is to help them internally choose a positive opinion towards your desired actions. 

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How to Deal with the Sensitive Issues of Succession Planning

If you’ve been thinking about succession planning, you already know there’s a lot to consider.  Dealing with estate minimization, tax avoidance, gifting, buy/sell agreements, etc., etc., can give people major headaches.  And then there’s the human element associated with the transition of wealth, family leadership, and business concerns from one generation to the next, where we sometimes trade headache for heartache.  

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1714 Hits

Help! My Parent Won’t Give Me the Chance to Lead the Business

Sometimes when my partners and I make a presentation at a national conference for one group or another, we go through a skit in which members of successive generations go back and forth over which generation should “call the shots.” It ends with the younger generation member saying something along the lines of, “Dad, when am I ever going to have THE seat at the table?  I’ve been carrying this business for the last 20 years and you’re still telling me what to do.  For crying out loud, I’m 53 years old!”  

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1771 Hits

Thoughts on Succession Planning and the Business Life Cycle

As a succession planner I am avidly seeking to motivate business owners to take action. Unfortunately, I am not batting 1,000 due to a variety of reasons. Beyond my personality quirks and communication shortcomings, there are many business owners who do not want to become engaged. Irrespective of my attempt to demonstrate how "succession planning builds value" they have limited, if any, interest in addressing the issues that impact the continuation of business success. Timing may be bad or other priorities may be dominating if not consuming excess mental energy. Or perhaps these business owners lack the motivation and experience to spend time and money on something that will not fall strictly into their personal column of benefits. 

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1799 Hits

How to Use Your Business Processes to Build a Solid Reputation

A client and I were walking back to my car when she asked, “When should we start to get concerned about our business reputation?” After a few seconds of thought, I answered “Well, if you wait until you have one, it could be too late. So I suppose the best time to be concerned about your reputation is before you actually have one. Then you still have time to help shape it rather than recover from it.”

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1547 Hits

Business Structuring and How it Can Impact Long-Term Goals

Business structuring deals with the mechanical aspect of how your business operates. The structure of your business has a direct impact upon items such as business taxation, control of business ownership, gift and estate tax on business transfers, and shareholder access to cash flow. As a business owner, it is critical that you or an experienced advisor understands the details relating to corporate structures and agreements between directors, owners, and key managers as they have a significant influence upon your business’ success and longevity.

 

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50/50 Partnership Not Working Anymore - How to Resolve While Still Maintaining a Working Relationship

Partnerships are curious animals.  Two or more people start off with a great idea; decide there’s some synergistic benefits in working together; shake hands; and start off with the very best of intentions.  And then everyone lives happily ever after.  

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The Pope and the Catholic Church: A Succession Planning Case Study

 As I embark on my first article as a member of The Rawls Group, I figured I might as well throw myself into the deep end and entertain a topic that is undoubtedly surrounded by controversy: religion. The recent changes occurring in the leadership of the Catholic Church have not only fascinated me, but have also led me to ponder how such a significant change to this steadfast organization will affect the group as a whole. And I am not simply talking about those directly involved in the selection of the next leader of the Catholic Church; I’m also referring to the millions of citizens around the world that look to the Pope for guidance, purpose and support. 

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1940 Hits

Reflecting On the Future - Succession Planning and Constant Changes in Federal Tax Law

What will the future bring after the last year or so of frenetic estate and business succession planning? I don't have any better crystal ball today than I had last year when I was advising clients to play "use it or lose it" with their gift and generation skipping tax credits. However one thing is for sure, estate and gift tax rates have increased to 40%. That means more liquidity will be required to transfer business interest to the next generation. After adding the State inheritance taxes most taxable estates will be taxed at 50% or more. A 50%+ transfer tax would lead me to believe that there will be no significant let up in estate planning.

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1687 Hits

Reflecting On the Present - Succession Planning and Constant Changes in Federal Tax Law

Here it is late January 2013, and I know I am not alone feeling both emotionally and physically tired. The holidays went by like a runaway Power Point presentation. My get-up-and-go has got-up-and-left. Clients that were calling every other day are not to be heard from. They don't want to talk to me, and for a spell the feelings are mutual. With the last minute tax deal which affirmed all the estate tax, gift tax and generation skipping tax credits and exemptions that we were afraid of losing were here to stay for the moment, there is a bit of an empty feeling. There's been some soul searching generating questions such as:

 

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