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How to Avoid Getting Squashed in Management and Family Feuds

Like many words in the English language, "squash" can have several meanings. For example, it can refer to a game played with racquets by players who whack a hollow ball around a court. For our purposes though, let's think of squash as the ancient sport of destroying someone else's ideas before they have a chance to break into full flower. It's generally played by one or more persons who use words as weapons and say things like: 

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To Create or Not Create a Succession Plan – That is the Question

On a regular basis, I get to talk with other succession planners. One of the topics that comes up frequently is the mindset a lot of business owners have in regards to needing a “triggering event” to prompt succession planning. The unfortunate thing about a triggering event is that it is usually just that, unfortunate. 

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Wal-Mart Approach to Succession Planning - Is There a One-Stop Shop?

As a business owner, many of your advisors may be offering succession planning services. Bankers, insurance agents, CPAs and attorneys are all promoting succession expertise within their menu of services. As a result, more and more business owners are approaching their CPA, insurance agent, investment banker or lending agent as if they are the Wal-Mart of financial and business advice. This corporate one-stop shop approach has investment bankers selling insurance, insurance specialists offering investment products, CPAs reviewing estate plans and attorneys recommending financial strategies.  As unnatural as this may seem, professional advisors are becoming more versatile than ever before, which is not necessarily a bad thing. However, it is important to remember that while they are offering advice that could leave you better off than you were before, it may still leave you short of your full potential.  

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Complications of an In-Law Employee

Succession planning takes a business owner in many directions. Not all families have natural successors, and not all family members are cut out to work in a family business. Furthermore, in many circumstances business owners desire to supplement the finances of unemployed family members. Therefore, I am commonly asked what to do about employing in-laws. My common answer is to tread carefully; hiring an in-law is a big deal and a complex undertaking.  

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Succeeding the Old Fashioned Way

The look on my face when the 54 year old dealer told me that he was promoting his 28 year old son to be the GM was a dead give away. “Why is that a problem? – I was a GM at that age!, he said.” And obviously it worked out great for this dealer, so why was I questioning his decision to promote his son? The issue I told him is that he grew up in an entirely different set of circumstances than the world his son experienced and the maturity levels created by such are hard to replicate. 

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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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Family and Business = Harmony or Fireworks?

A dealer recently told me, “I have one brother who is my best friend and one who I don’t talk with, all because of business and financial issues.” Tragic yes, but not uncommon. Having worked with auto dealers and their families for 27 years, I have witnessed situation after situation in which the family business has resulted in lots of family heartache. Fortunately that does not have to be the end result and there are many examples of family dealerships being run successfully by harmonious family members. So what are the landmines that you need to avoid?

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Is Your Successor Ready to Take Over Today

I saw a cartoon recently in which the owner of a business said to his son as they gazed out of the window on the family business, “Someday Son, this will all be yours, unless I can come up with a better solution!” That statement echoes the sentiment of many dealers I’ve worked with who are worried that their son or daughter is not prepared to be able to lead the company if something happened to Dad today. 

The question that needs to be answered involves the following: Is your successor identified, trained, approved by the manufacturer/s, respected by management and able to run the company successfully today? This may involve your son or daughter, or possibly a key manager. Unfortunately, in most dealer’s situations, the answer would be “no” or “I hope so”, neither of which is a satisfactory answer.

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How to Attract and Retain High Performers for Your Business

  • Do you have key employees who are telling you they want a piece of the action – an ownership interest in the dealership? 
  • Do you have key employees whom you want to retain in the dealership over the long term? 
  • Do you have highly compensated employees who are getting killed income tax-wise and want to know what you can do to help? 
  • Are you looking for ways to create greater incentives for your key employees? 

If you answered yes to any of the above questions, then you should consider utilizing some type of non-qualified deferred compensation plan(s) in your dealership. The Fortune 500 companies have been using NQDC plans for years to attract and retain their key employees and so should you. 

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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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(Mis)Perceptions About Change and Their Impact on Succession Planning

A friend who’s never been a client periodically calls me to ask my opinion about how he can implement the change he needs in his organization.  He usually ends the conversation with some slight variation of this comment:  “I don’t care what you say, how many times you say it, or how loud you say it.  People can’t and don’t change.”  

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Why I Always Encourage Prenups

Returning on another prenup mission I count my blessing that I did not cause a problem endeavoring to avoid one. An important component of succession planning is addressing the potential issues of successors which no doubt includes the considering the dark sides of marriage: death with a dependent widow and divorce. 

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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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Succession Planning: Is There a Right Time to Start?

During a recent presentation, someone in the audience asked if there was a right time to begin putting a succession plan together. I didn't want to sound arrogant, so I simply replied, "Yes, of course there is. What time is it now?" 

Sooner or later, one or more generations involved in a family business wants to talk about succession planning. Sometimes the idea comes from the next generation to lead the business; other times it comes from the generation currently leading the business or from multiple generations simultaneously.

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Avoid Having “Have” Problems – Understand Your Responsibilities as a Successful Businessperson

Business succession planning is not a well understood profession. Consequently, I am commonly asked what do I really do? After confirming that "No, I am not a life insurance salesman," I commonly express that I deal with problems on the have side. After contending with the chuckling I endeavor to defend the virtue of what I do by explaining that have problems don't get much sympathy because of the assumption that people who are not wanting, really don't have problems. From my unique perspective, I assure you this is not the case.  

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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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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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Busting a Succession Myth: Talent and Intelligence Are Overrated!

I know.  You thought you were supposed to pick the best and the brightest. Once upon a time so did I.  And then I learned a very important lesson:  The most talented person is not always the best person, and some people really are too smart for their own good.

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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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