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Succession Planner Adapts to Charlotte's Rules

Business succession planners are by nature "roadies." Succession planners are unique individuals with a diverse set of financial, investment, legal, accounting, coaching, mentoring and psychological skills that are offered in a way that is unique to each planner and compatible to a certain segment of clients. Due to the unique nature of the service and the clients, engagements are often at a distance. Therefore, travel is a fundamental part of the gig. Unfortunately traveling involves challenges which can be as demanding as my day job. Dealing with these challenges is eloquently summed up in the words of Crosby Stills and Nash: "We who are on the road, have a code that we must live by..."

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Successor Development - Trust the Trustworthy

As I go about the closely held business market working with clients and meeting prospects, Successor Preparation and Development and Exit Strategy are very active subjects. The states of mind I encounter in these business owners range from peace and excitement of their impending succession to turmoil and anxiety. Those at peace tend to have a diversity of interests beyond the business and are excited about what they will be doing when they transfer leadership and management responsibility. They are also excited about what their successors will do when they get their time at the plate as they’ve spent quality time and effort training and mentoring them. These owners are proud of their achievements with respect to making the business not dependent upon them. They neither profess perfection nor expect perfection recognizing that their successors will make mistakes and learn from them just as they once did. Most of these at peace owners believe that their successors need to hit only about as well as Hall of Famer, Ted Williams (.402), to take the business to even higher levels of success.  

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Succession Planning Builds Value - Manufacturers Are Beginning to Understand and Promote the Benefits, Part 2

“Big Boy” corporations such as manufacturers and franchisers are in recovery mode from the business downturn of the last four or so years. As these organizations reflect back to lessons learned, they have identified that poor distributor succession circumstances was a critical reason they took such a financial beating.  Simply, their dealers and franchisees had spent all their time working in their business rather than on their business, which would have better prepared them to be able to weather the storm.

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Succession Planning and Business Growth

“What are your goals?” is the common question I present to clients and prospects. 

“We want to grow,” is the common response I get from dealers who have found a way to make decent money in indecent times. And as though we were talking about buying filters for an air conditioner, they continue with, “and we would like to pick up a couple, three maybe four more dealerships. We know the management formula; all we need are the deals.”  

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6 Steps For Engraining the Succession Planning Mindset Into Business Habits

As a Certified Succession Planner™, I have the great privilege of talking with business owners, family members, family member employees, and key managers in those businesses.  In one of my most recent sessions, one of the participants asked, "How do you form the habit of thinking about succession and taking action to make sure that it happens?"

That really is a good question. We see later generation leaders vowing that what happened to them will not happen to their spouses, children, or key managers.   Even with the best of intentions, however, we still seem to set ourselves up to repeat history.

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Manufacturers Are Coming Out of the Succession Ether, Part 1

The big boys are coming out of the succession ether. These "big boys" are the franchisers and manufacturers representing a wide range of industries that rely on entrepreneurs to sell their products and make their customers happy.

Until recently, these big boys acted as though they didn't respect the talents of their distributors nor acknowledge their vested interest in their ongoing success.  The predominate opinion was:

“We don’t need to worry about the succession of our distributors; there is an endless source of replacement candidates; it is really to our advantage if a distributor fails because we get to pick a replacement that will drink our Kool-Aid.” 

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Did Your Successor Just Leave?

Sometimes a telephone ring sounds ominous.  When I answered a call from Cliff last Wednesday, that proved to be the case.  "You're not going to believe what just happened.  Jack came into my office and told me he is leaving in two weeks!  I can't believe it - he's the person I've been counting on to be my successor! Now what do I do?"

"You start looking for another one," I replied.  "And this time, let us help you find someone who really wants to be number one of your organization and fits your culture.  Ambition may open the door.  It's commitment that keeps what's inside appealing."

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OPPORTUNITYISNOWHERE

Take a close look at the run together letters above?  Now, without changing the sequence of the letters, break those twenty letters into a sentence.

If you've had a particularly difficult day or few days, your sentence might read "Opportunity is nowhere."  That's most likely the case if you've gotten disappointing results after completing the "Where Are My People" (WAMP) analysis discussed in my previous blog post.  All of a sudden, you have no successor and things aren't looking real bright when it comes to the key managers and leaders within your organization either.  You might be thinking, "What have I done with that list of business brokers?  I know it's around here somewhere."

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How Financial Independence Can Impact Succession and Growth Goals

We live in the greatest country in the world! As we prepare to celebrate Independence Day, I thought it would be an appropriate time to reflect upon how fortunate we are to be Americans. Each day when we wake up, we have the freedom to choose how we will invest our time, talents and treasure. Thanks to God and our fellow Americans who have gone before us and who have made the ultimate sacrifice to provide us this luxury, we have the ability to make choices each day.  Some of us choose to invest our time, talent and treasures pursuing the American Dream by working for others while some of us choose to build businesses to provide opportunities for others and in an effort to achieve financial freedom and independence. Achieving financial freedom and independence is a challenging endeavor that requires focus, commitment and discipline.

What is financial freedom? Financial freedom implies that one has enough income to maintain their standard of living and therefore has the ability to pursue other interests outside of employment.  Financial freedom in the context of business succession means accumulating enough liquid resources independent of the business whereby you are not financially dependent upon the business to maintain your standard of living.  As a business owner in a family business setting, why is attaining financial freedom so important?

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Strategic Planning and Succession Planning: What's the Difference?

I am often asked what the difference is between strategic planning and succession planning. Strategic planning and succession planning have significant similarity, both being long term endeavors with significant overlap.  The stakes are high in each endeavor. The success or failure of either will have a long-term, lasting impact upon the business. Likewise, unawareness of the importance of the initiatives or an unwillingness to address either initiative will also have an undesired, lasting impact. Therefore, this is a legitimate question meriting an extended answer to avoid confusion. 

Strategic planning is an important component of succession planning and is one of the ten interdependent factors of the Succession Matrix® that also includes: Owner Motivation and Perspective; Successor Identification and Preparation; Key Manager Motivation and Retention; Teamwork and Synergy; Business Structuring; Personal Financial Planning; Family Governance; Leadership and Management Continuity and Family Communication and Harmony. Each of these factors and their interdependence are explained in more detail on our website.

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Strategic Planning and Succession Planning: Different Goals and Teams

As I discussed in my last post, strategic planning and succession planning both are long term endeavors with significant overlap and many similarities. However, the defining and distinguishing characteristics of succession planning are reflected in the differences in these two very important leadership and management initiatives.

The differences are reflected in the goals, scope, focus and the term of these two endeavors. The purpose of strategic planning is the confirmation of goals and priorities and the optimization of business performance through the effective alignment of business resources with performance objectives. Business resources can be broken down into three general categories: time, people and money. Strategic planning endeavors to optimize synergy, productivity and efficiency by confirming priorities and establishing compatible plans for the achievement of realistic performance benchmarks.

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Strategic Planning and Succession Planning: What You Should Know About Expertise and Time Frames

As we have been discussing, strategic planning and succession planning are two different long term endeavors that have many similarities. In my previous post, we looked at the differences in the goals and scope of these two very important leadership and management initiatives. So that we can achieve even more clarification between these two, we will consider the focus and term of strategic and succession planning and how they differ.

If you have a succession plan you have a strategic plan because the Succession Matrix®considers strategic planning one of the ten interdependent factors essential to a complete succession plan. However due to the difference in scope of these two endeavors, it is important to remember that just because you have a strategic plan, you do not necessarily have a succession plan.

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Having A Hard Time Creating Buy-In? You May Be Confusing the Business with the Legacy

Not too long ago, a client asked how he could get his family members more excited about the family business.  "What would you do?” he asked.  "Well, what are you trying to sell them: The business or the legacy?"  I asked.  He paused and then replied, "I don't know the difference." 

Does that sound familiar to you?  If you're the family leader, can you distinguish between the business and the legacy?  While they may be one and the same to you, other family members may not make the same connection.

The farther away potential successors get from your motivation and perspectives, the more likely they are to have different understandings of what the legacy really is.  As an example, one of my clients has done quite well for two generations by pretty much ignoring the "green" movement.  Now comes the tail end of the third generation, and guess what repulses them about the business? 

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How to Focus On Outcomes and Get People In the Game

Some people are more effective than others when it comes to succession planning.  A few people are good at it because they have multiple generations of experience supporting them; others are good at it because they have the right team of trusted advisors looking after their interests.  In both cases, they have a proven model they can depend upon.

As you participate in your own succession journey, with or without benefit of such experience, there are a few factors that will be important to drawing people into a developing legacy.  When applied deftly, they make the compelling difference between ambivalence and commitment.  Consider these points.

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Why Employee Contracts Are So Important to the Succession Planning Process

Business Structuring is a critical factor of the interdependent Succession Matrix®. Business Structuring impacts the nine other factors of the Succession Matrix® and accordingly, those other nine factors positively or negatively impact Business Structuring. For more information on all ten factors, refer to the International Succession Planning Association website at www.ISPAssociation.org.  

Business Structuring actually consists of two sub-factors, Business Organization and Business Documentation. Business Organization refers to the actual structure of the business as a corporation, LLC, partnership, etc. and its alignment to the strategic goals the business has for the continuation of success through the next generation of owners and managers. Business Documentation, as the name implies, refers to the actual documentation that formalizes the business organization as well as agreements regarding the disposition of ownership, leases of equipment and real estate, and contracts with vendors (franchisers, distributors, lenders) and employees. With respect to employment contracts, I am often asked what role an employment contract has in business succession planning. In light of the volume of curiosity, let’s embrace this subject.

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Don't Overlook the Employment Contract - How It Can Impact Your Exit Strategy, Cash Flow and Protection from the IRS

As a dedicated business succession planner, I am often bringing up the subject of employment contracts. The predictable initial response is “I hate contracts and what role could an employment contract have in my business succession planning?” This question generally comes from someone who has 80% of his/her net worth tied up directly or indirectly in their business and does not have a prayer of retiring without concerns about their financial security. They are plagued with the concerns of “Where am I going to get income?” and “How will I replace my current benefit package?”  Fortunately, the employment contract can be a very valuable tool in relieving these concerns and facilitating business succession planning.

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Don't Overlook the Employment Contract - How It Can Lock In Your Competitive Edge

In addition to employment contracts being beneficial for business owners, they also can play a very important succession role with key managers. Business owners commonly have concerns that key managers, critical to the continuation of the business’ success, could be recruited away by a competitor. There is also concern that the key managers could become frustrated with their perception of the succession plan and jump ship after the owner’s retirement rather than give the successors a chance to earn respect.  And the nightmare of nightmares is that with access to customer lists, processes and technology, a key manager could hook up with a competitor and inflict devastating damage on the business. These concerns about the commitment of key managers commonly impede exit strategy, successor identification and preparation, the transfer of management responsibility and the transfer of stock.

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Succession Planning and the "Right Time" Myth

"I probably should do something about succession planning, but the timing just doesn't seem to be right.  There's a wedding coming up, we've got another grandchild on the way, and none of our children seem to want to have anything to do with the business.  Maybe I should just sell it."

That's a distilled version of a conversation I recently overheard in an airport.  I was minding my own business, and I heard those magic few words that immediately drew me in:  succession planning.  What really struck me was how creative and rationalizing we can be when faced with actions we don't really want to take. 

In reality, the best time for succession planning is similar to the best time for planting an oak tree, twenty years ago.  But, for whatever reasons, it didn't.  So that takes us to the second best time:  today.

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Debate vs Brainstorming - Which One Actually Generates the Results You Want

Some people like to think out loud.  In fact, they must talk in order to think.  They love brainstorming; it’s how they create their map of reality.  The problem is that they think everyone else has to engage in the same technique in order to have an abundance of good ideas.  As a result, they subject whatever group they happen to be playing with – family, business, community – to the same process of “out loud” and “out of the box” thinking.

These brainstorming fanatics have even gone so far as to set up rules on how this unbridled creativity is to take place.  The most important rule requires that no one say anything negative or critical of another’s ideas.  In many cases, groups – family, business, community – leave a room pleased that the walls are covered with contributions.  This ideal, feel good boost to productivity or problem resolution seems to be the ultimate in creativity.

There’s only one problem...

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How Emotions Can Triumph Over Reason

Whoa! I was totally not prepared for the meeting I just had with my client. I thought I was. In fact, I was very prepared based upon our last meeting and all the decisions that had been made.  However, life, and clients, have a way of throwing you curve balls. Sybil showed up again!

The bottom line is that I came into this meeting ready to facilitate the client making some substantial asset transfers to his youngest son – it was supposed to be a slam dunk. The transfer was going to be of B-Member units in a real estate LLC.  The transfer was for tax planning purposes and to bring the youngest son up to parity with his older brothers on transfers that the father had previously made to them. The transfer would have had no impact whatsoever on the client’s control of the asset or on his income. Simple, right? No brainer, right?

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