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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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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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Tips for Approaching Succession Planning with Your Franchisor

A few years ago I encountered a franchisee who had successfully transferred more than $2 million of business value to his children by taking advantage of available minority discounts in conjunction with depressed goodwill and depressed real estate values — a brilliant estate planning move. The only problem was that he had not received permission from his franchisor as stipulated in the franchise agreement.

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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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Tips for In-Laws in the Family Business

There are many potential landmines for in-laws in a family business environment. To navigate them successfully, keep the following simple steps in mind: 

  1. Acknowledge your role as an in-law. You are “family” with a caveat. Tread carefully and treat everyone with respect.  
  2. Understand the family’s unwritten laws. Observe and strive to uphold those laws. 
  3. Maintain pure motives regarding your involvement in your spouse’s family business. 
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Building Success: Do’s and Don’ts for Leadership

Business success, more than just “getting by,” is an essential first step to succession planning. Success is a key ingredient to Succession. It drives momentum, culture, purpose and profits that create business value.

As I work my way around the patch, I am often asked, “Swami of Succession, how do I build a level of success to justify succession planning?” It should come as no surprise to you that I don’t have a “silver bullet” answer. However, I can definitely share some “do’s” and “don’ts” of leadership and management that I have consistently witnessed as having a direct impact on success. 

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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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Wimps Lose Out! Plan for the Future of Your Business

Succession planning is not a project, but an ongoing process requiring strength, resilience, and sometimes pure guts! Here are some steps to help you navigate the process of planning for the future and continued success of your business. 

  1. Develop a Vision – Affirm the concept that “the end must justify the means,” and take the first step for planning for the future of your business by developing a vision. This vision should be an inspiring and motivating mental image of what you want to see happen in the future such as: 

    • In 10 years, I want to be cruising on the Riviera while my business remains profitable! 
    • I want to build x-amount of value in my business so I can sell it by 2030 and live off the proceeds! 
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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.” 

To make sure your business processes positively impact your reputation, you need to choose what you want to be best known for in the marketplace: operations (cost and speed); innovation (cutting edge of the industry); or customer relationships (ease of doing business). Your business processes reflect favorably or unfavorably on which brand designation you choose. 

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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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