Are You a 1-percenter?
by Tom Kirk
No, I am not referring to the claimed 1% of motorcyclists who say they are part of outlaw gangs like the Hells Angles, Pagans and Warlocks. I am referring to the 1% of small businesses that will survive ten years and then successfully transition their ownership. Against such overwhelming odds, business transition is a huge challenge for the millions of baby-boom entrepreneurs who have been successfully running their small business for years that now find themselves between ages 52 and 72 and want to hand the business reigns over to someone else. But to whom, how and when can be difficult questions to answer, especially with so much at stake.
Relationships – Finances – Legacy
Businesses are built upon hundreds, maybe thousands, of quality relationships with employees, customers, clients, patients, vendors and the business community in which it operates. These relationships are developed over years of trial and error, effort and accomplishment, and often represent a high level of mutual respect and admiration forged in the crucible of solving business challenges together. In a successful business transition these relationships continue to grow and are the foundation upon which future prosperity is built.
I have friends who, as brothers, own and manage a small chain of five grocery stores in the New York metropolitan area. They started as bag boys in the one store their father started and worked their way into the leadership positions they have today. They are very successful and leaders in their industry. They recognize and value the head start they got because of the relationships established by their father. The way they say it is they started their business life already on second base. They know this made it a lot easier for them to score the home run they are now experiencing.
Many business owners experience a very comfortable standard of living funded by the cash flow they receive from their business. This can make it difficult to imagine ever not owning the business upon which their lifestyle depends. How can this ever be replaced? A successful business transition accomplishes the very delicate act of balancing the goals of the current owners to extract enough value over time in order to live as they desire, while not killing the goose that laid the golden egg by overburdening the company and its future owners. Properly structured, the result can be value received for what has been created with future risk and reward transferred to the new owners.
A critical financial question that must be answered is “How much do I need to live as I desire?”. The answer to this question can be one of the results of an integrated WealthPlan™ that considers all you have already accomplished and compares that to the resources you will need to experience the financial future you desire. The shortfall (if any) can be used as a benchmark for the value you may need to receive as part of a business transition strategy. This knowledge can help you determine if selling some or all of your current business interest is a viable strategy to help achieve your goals. Maybe you will decide the value of the company is not high enough yet and you need to work a few more years to grow the businesses, increasing its value and your personal net worth. In any case, you now have a WealthPlan™ with benchmarks and time frames against which you can gauge your progress, significantly increasing your likelihood of success.
One definition of legacy is “a thing handed down by a predecessor”. In a successful business transition there can be a sense of pride and accomplishment that all the lessons learned through years of success and failures, relationships made and broken, great achievements and false starts, will survive and continue to benefit others and not die with the current business owners. Such an experience, of handing this legacy on others, can be the cherry on top of a life’s work.
Would you like to be among the 1% of business owners who will successfully transition their business after ten years and experience the resulting joy and satisfaction that includes continuing relationships, financial confidence and leaving a powerful legacy? This can be your future, but it takes action on your part different than those you take to run your business. That’s why we offer The Business Transition Roadmap Developer™, a transformational process that takes into consideration the practical, financial and emotional aspects of your unique business transition challenge and delivers a customized step-by-step action plan designed to increase your likelihood of success.
All small businesses transition eventually. Be intentional about how you want this to happen Please call our wealth services firm in Satellite Beach, FL – Melbourne/Brevard area at (321) 773-7773 to schedule a complimentary consultation with one of our WealthCoaches™ to see if The Transition Roadmap Developer™ is the process you may want to investigate for improved clarity in this critically important area of your personal and business life.