By: Corey Butler, Wealth Advisor
Meriam Webster’s definition of succession:
“The order in which or the conditions under which one person after another succeeds to a property, dignity, title, or throne.”
The next 10 years will be the largest period of succession for business owners like never before. Aging demographics are highlighting this exposure for business owners. Who, what, and how will one take over the business practice. Biz owners of all walks of life have the same trait of control hardwired in them. Control is what has allowed him/her to make those hard decisions. Control has offered a sense of freedom with direction and outcome. For most the thought of succession equals loss of control, purpose and the end of the chapter.
The reality is something much different with a well thought out and executed succession plan the business owner can have their cake and eat it too. How is that possible? Share structure and tax planning are the key ingredients to make this happen. The buy/sell agreement that has not seen the light of day since inception must have the I’s dotted and T’s crossed so revisiting and reviewing is so ever important. To ensure you have a successful passing of the torch you really need to make sure you and your buyer are not just on the same page but same paragraph and better yet same sentence. Having a trusted advisory team representing all parties will ensure that all parties are happy with the result. Everyone may not get exactly what they want as everyone may have to give a little, this is where your advisory team is key.
Too much time is spent on making sure everything is perfect with a succession plan when the reality is that success can only be achieved when all parties are willing and able to come back to the table anytime there are challenges. Life is never dull, and the grind is real in business. Stuff always happens and to be successful one must accept that stuff will happen.
A succession plan starts by planning from “Right to Left”. You know where you want to be but how do you get there? Creating a succession plan pending complexity can take anywhere from 6-18 months. As you know the days and weeks pass by quickly, and with every year we continue to age, so completing a plan that will provide for 20-25 years of income certainly will take a considerable investment of one’s time. Let alone the sheer fact that business keeps happening each and every day. No one solution but a combination of solutions will equal success.
Ecivda Financial Planning Group is trusted advisory team with over 50 years of experience helping business owners pass their torch! We have recently completed our own in-house succession plan and can so relate to your concerns and challenges. If this resonates then you know what to do next!