Ellen Long

Plan

“to arrange or design a method for obtaining specified benefits or filling certain needs.”

Cu·rated

“to select, organize, and present information, typically using professional or expert knowledge.”

Plan Curation is simple: Solve problems, and find the best way to maximize benefits.

Take it from Gary.

Gary had inherited the business from his father, and always assumed his kids would want to take it over when he retired.

Only problem? They didn’t want it. When we asked him what his plan was now that his kids were out, he said, “Actually, I’ve been thinking about it for YEARS and have no idea.”

Honestly, that’s pretty common for most business owners we meet. Not because they are unintelligent – actually the opposite! But their problems are difficult, they get multiple ideas from every professional, and they are busy running their successful business. They don’t have the time to develop an elaborate plan that takes into account all the options, opportunities, and benefits available.

Gary was no different. He didn’t feel like he had the time, energy, or expertise to devote to this kind of in-depth planning.

His situation in a nutshell:

1. Estate Taxes – No matter what he did, Tom’s kids were going to owe the government a lot of money.

2. His sister, a minority owner, didn’t have enough money for retirement

3. He had employees that were like family – if possible, he wanted them to be able to keep working in the business

4. Even though his kids didn’t want the business, he still wanted them to benefit

5. He wanted to travel with his wife, work his ranch, and play with his grandkids without worrying about the future

The solution? Sell to a third party at maximum price. We helped hire a CEO to run the business, added new incentive plans and golden parachutes so the employees were incentivized to grow the company and stay with it, and made sure he had professionals that could make it happen.

It took time, like all good plans do. But in the end, Tom was a hero. His sister was able to fund her retirement with the proceeds, Tom got to spend time on his ranch and travel with his wife, and instead of the children owing taxes on a company they didn’t want, they received an inheritance to help them get through the next phase of life.

That’s the kind of story we live for.

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“THE THINGS YOU DO FOR YOURSELF ARE GONE WHEN YOU ARE GONE, BUT THE THINGS YOU DO FOR OTHERS REMAIN AS YOUR LEGACY.” – KALU NDUKWE KALU

Although the taste of success is sweet, the reward of leaving a legacy is even sweeter. In business, as well as in life, if you are not moving forward, you are moving backward. Anything that isn’t growing, is dying, or is already dead. The goal should not to merely be successful financially, but to be significant in the lives of others.

In Galatians 6:7 the Bible says “a man reaps what he sows”. This is true. Many times the proof can be found in the lineage of the family, through the lives of the sower’s children and grandchildren. The parents that ignore their children, coddle them, or neglect to teach them, often end up with broken families. Their children self-destruct, starting a cycle that may last for generations. The parents that teach their children well, in every area of life, tend to have families that love each other, work hard, and share common values based on faith in God. These Legacy Families generally continue to create more Legacy Families, thus having many generations living lives of significance, having learned from their ancestors.

Never be afraid to take up the fight to make this world a better place for your children and grandchildren by building families and businesses that thrive and endure for generations. Make the time to love and teach them. If you have children, being a good parent is your most important role in life. Live balanced lives that include being responsible parents and grandparents as well as building a business for which you can also be proud. Leaving a legacy isn’t easy, it takes guts and determination, but don’t let anyone convince you that it is impossible! All things are possible with focus and determination.

MANY BUSINESS OWNERS LIVE FOR THE DAY THAT THEY CAN FINALLY SELL THEIR BUSINESS OR PASS IT ON TO THE APPROPRIATE HEIR, AND WHEN THEY DO IT OFTEN COMES WITH A SIGH OF RELIEF.

Though this often marks as a time to celebrate, it is also a time to take a step back and recognize that you’re not quite off the hook. Post sale is where many owners go awry, which can make the sweetest season of life a stressful and trying time. Owners often dream of the day that they can relax, spend time with their family, and enjoy the little things in life, however it is quite typical in this post sale time for owners to blow through their money, lose it, transition poorly, or create inner family feuding.

Transitioning from a business should open up a world of opportunity, where you can devote your time to philanthropy, community volunteering, and church events, instead of a time of strife. The unfortunate fact is that many owners will find themselves in a very different place after exiting a company than where they originally imagined. As a result, it is vital that owners envision their post-business life long before the sale is final.

Never presume that because you could run the company well, you can also run the capital well. Once a sale goes through, owners should take measures immediately to diversify their holdings in order to lower risk. The best way to address redeployment of assets is through a comprehensive wealth management plan that determines how much income is needed to keep pace with inflation and provides the owner with the lifestyle he desires. Remember that wealth is a burden as well as a blessing to you and your family. As Jackie Joyner once said, “It’s better to look ahead and prepare, than to look back and regret.”

ANYONE LOOKING TO SELL THEIR COMPANY TO A THIRD PARTY KNOWS THAT THE FIRST STEP IN SALES READINESS IS TO EXAMINE THE MARKET, BUT WHAT HAPPENS AFTER THAT?

Simple. This is the point where you will need to factor in competitors, potential buyers, industry acquisition activity, and your own competitive advantage.

Advisors will want to look into the insights you have on your competitors, and if any might be interested in buying your company. A helpful hint during this process is to also have your sales team know how your company measures up to applicable industry standards. Listing competitors, vendors, and others outside of the company who you think could potentially benefit from buying your business is incredibly valuable. By conducting an analysis on all of this, you will aid in receiving a higher selling price from strategic buyers.

Understanding your own company’s competitive advantage is key to a successful sale. Take a step back and ask yourself the following questions. Do you know why customers buy from you instead of from your competitors? Have you thought about developing and verbalizing your competitive advantage? What about how to better position your company to appeal to buyers? Owners who know why their customers prefer their business can have an enormous advantage when it comes to bargaining. Knowing exactly what makes your company better gives you a better ability to negotiate a superior price.

WHEN SELLING OR TRANSITIONING TO AN INSIDER, PRE-SALE PLANNING IS JUST AS VITAL AS IT WOULD BE FOR AN OUTSIDE SALE.

Insider transactions often involve rewarding a long-time and loyal employee, while also extracting value from the business for your own family and retirement at the same time.

In order to ensure a successful transfer you must remember these three primary objectives:

1. Transfer to whom you want
2. Transfer when you want
3. Transfer for the price you need or desire

The most effective way to make this happen is to ease into the transition.

First, have the new owners replace you in the business operations, meaning that you will need to slowly transition out of the leadership position. Next, slowly transfer ownership without losing control. There are a handful of ways to do this, but you should establish objective standards for your potential successor to meet before the ownership is sold. These objectives should consist of receipt of purchase money, release of your personal liability to the business creditors, plans to pay off business debt, etc. From there, with the appropriate amount of time, you should begin transferring a substantial portion of the equity ownership. The final step is to transfer control when, and only when, all of your ownership objectives have been met.

Whether you have a group of individuals who would jump at the chance of buying your business, or you have a key employee in mind for the transfer, the sooner you plan and make decisions, the better.

THOUGH MANY WOULDN’T GUESS IT, THE TRANSITION OF YOUR BUSINESS TO A FAMILY MEMBER CAN BE THE HARDEST TRANSITION TO PULL OFF.

Naturally you would assume that handing off your business to like-minded individuals whom you love, and who love you, would be easier than any other passing of the proverbial torch; however, this is not always the case.

When transitioning your business to your children or other family members, there are a myriad of other factors to consider that exist outside the financial sphere. With family comes conflict, emotions, and sentiments – on top of everything else you must consider when making the big change into retirement. The unfortunate, but very true reality of the transitioning to a family member is that simple family conflicts have the potential to completely derail the entire process.

It is quite typical for business families to suppress their conflicts in the name of professionalism, which can lead to uncovering some hard feelings from past situations when it’s time for you to make your exit from the company. Any change as large as transitioning has the potential to turn into a power struggle no matter how much your family loves you. The key to smoothing relationships and maintaining transition momentum is the understanding that the problem at hand is unlikely the actual issue, but an old wound reopened.

There really is no perfect formula for timing a transition, or for creating a succession plan. Every business is different, but the key to success in any situation is to accommodate opportunity and manage risk. You simply must understand your own family situation and the business environment around you. No matter what your situation warrants though, it is best to recognize that the sooner you address these issues, the better.