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Protect your Future by Planning in the Present

Most people believe that succession planning is synonymous with estate planning; wills, trusts, estate tax, life insurance, franchisor/manufacturer approval or gifts to family members. No doubt estate planning is an important component of succession planning. However, for anyone who has struggled with family squabbles, successor development, retaining and recruiting top talent, and unreasonable strategic partners I can assure you there is more to succession planning than estate planning. The best estate plan on the planet is no assurance of the continuation of business success.

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Getting Comfortable with Your Exit Strategy

Before you can get comfortable, you first need to define your exit strategy. This means being able to define what your exit will look like and the range of options are broad and include:

  • Complete cold turkey break from operations
  • Exiting day-to-day management but continuing to have operational final say
  • Entrepreneur’s retirement: participate when you want to, and delegate decision making power to an individual successor or board of directors
  • Sale of the business
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Identifying Successors: Family Member Versus a Key-Manager?

Identifying and developing successor candidates can be a challenging endeavor, especially when evaluating family member and key manager successor candidates. The difference between a family member employee and a key manager can be compared to an ongoing rivalry between 2 current NFL quarterbacks, Tom Brady and Peyton Manning. Their routes to the NFL couldn’t have been more different. Brady an unknown back-up in college and Manning whose essentially quarterback royalty.

The expectations of a young Tom Brady were low. His sixth-round draft position led to little hope of success. Mistakes were expected and successes a pleasant surprise. Brady’s was an underdog, lucky to be given a chance. This is the story of a key manager with hopes of running his own business someday.

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Family Business Decisions - How Emotions Can Triumph Over Reason

Whoa! I was definitely not prepared for the meeting I just had with my client. Going into the meeting, I thought I was well prepared.

However, I came to realize that emotions have a way of clouding what appears to be very straightforward decisions. The meeting was to facilitate the client transferring substantial assets to his youngest son. The transfer was for estate tax planning purposes and to bring the youngest son up to parity with his older brothers based on earlier transfers the father had made to them. Prior to the meeting, we also had multiple discussions about how the transfer would have had no impact whatsoever on the client’s control of the asset or on his income. It was supposed to be a slam dunk, no brainer meeting. However, it turned into a classic case of emotional hijacking.    

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Identifying Successors - Can I Have Multiple Successors?

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~ An Excerpt from Family Business Heartburn Relief™~

The vast majority of businesses have a designated "successor leader." However, a business can have multiple successor candidates, who can provide support to "the leader." Successor candidates include any family member or key manager who brings value to the business and is prepared to serve as a leader with a goal of perpetuating the success of the business.

Multiple successor candidates ideally generate a team of successors who are led by the successor leader. The interaction of multiple successor candidates can be complex especially if there are no expressed parameters for sibling/cousin/Key Manager interaction; or if back biting, resentment and rivalry are tolerated. However, assuming there is mutual respect among the group of next generation successors, the more successors who have skin in the game and a vested interest in continued success, the merrier. Multiple successors, effectively managed, create organizational strength, resilience, power and leadership bench strength. 

Email This email address is being protected from spambots. You need JavaScript enabled to view it. for an electronic version of Family Business Heartburn Relief

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