Pacific Life Insurance, the one with the whales in its TV commercials, asks the question “Are you prepared for your retirement years – twenty five or more of them?”
Of course, being a life insurance company the focus is on ‘Your financial future.”
Twenty five years of ‘retirement’ is a long time! And it’s a likely probability for a lot of baby boomers. And there’s more ahead than just the financial part. There’s your life - life after you, a business owner, sell your business!
Many, business owners have retained their financial and legal consultants to plan their financial future. That’s a good thing. It has been estimated that as much as 70 to 85 per cent of many business owner’s net worth is in her/his business. So it’s smart to have a plan to harvest that investment from the business and move it into a personal portfolio.
We all know of business owners who have no vision for life after retirement. So they just hold on to their business. They have no plans for the next phase of their life so they just keep doing what they know. They can’t move on! Instead of going out on top, they ‘stay when they should go,’ suffocating the business they built, that, in turn, sucks their personal savings back into the business to keep it alive.
It doesn’t have to be that way. In addition to having a financial plan, every business owner needs to plan for their personal future – their next phase – and for the future of the company without them.
The challenge is to think about their company and themselves as separate entities and to develop a transition plan, in advance, for each to go their own way. That’s more than just their financial future!
In future articles we’ll explore the non-financial elements of your future as a business owner contemplating retirement.
Showing posts with label succession planning. Show all posts
Showing posts with label succession planning. Show all posts
Monday, October 3, 2011
Friday, July 22, 2011
FIVE KEY QUESTIONS FOR EVERY BUSINESS OWNER
Sooner or later every business owner must address the question, “How will I successfully sell my business and move on with my life?”
Many of the owners I have talked to seem to be ‘marching in place’ acknowledging that they need to plan for their future but are in denial about the need to plan ahead. They seem to believe that the process is simple and the time to ‘make it happen’ will be short. Actually, that’s not the case for most of them.
Every Business Owner needs to develop a transition strategy with plenty of time to execute it 'on their time table' to withdraw their equity, assure the continued success of their business and, prepare, personally, for the 'next phase' of their life.
The transition strategy must address three key areas of concern:
Financial
Personal
Company
They often have addressed the financial aspect but not the other two.
Here are five key questions for the Business Owner to answer that become the building blocks of each Transition Strategy:
1) How will I harvest my investment?
2) Who will purchase my business?
Will I sell to an external buyer?
Will I sell internally - to my family, partners, key staff?
3) What is the legacy I want to leave?
4) What do I want to do in the next phase of my life?
5) What is my timetable?
Developing and implementing a Transition Strategy can be a long term process that begins with working out the answer to these questions, planning the strategy and identifying the action steps to 'make it all happen.'
All these questions are inter-related. For instance, the owner must decide who the prospective buyers might be. If it will be internal buyers, the seller must determine that the buyers are prepared well in advance. The buyers must have passion, the ability to manage the business and the money to buy the business on the owner’s terms.
Several owners I've worked with expected to sell to their partners or staff only to discover that there wasn't enough time or the potential buyers didn't have the resources.
I have also worked with several owners who think they are ready to sell the business but 'get cold feet' because they aren't prepared, emotionally, to move on with their lives. They haven't chosen a next phase of their lives after they make the transition. Making the decisions feels like a dead end or like falling off a cliff. So they hold on too long and their equity diminishes.
For the transition to be successful, the owner must addresses the five questions and develop a comprehensive Transition Strategy well in advance.
My work focuses on these five questions. I begin working with the business owner, helping her or him explore their aspirations and cataloguing the key issues they need to address to plan their transition, Working with the owner, and sometimes their key professional advisors, I help the owner identify he or/his desired results and develop a transition strategy to achieve those results.
In future articles, I’ll discuss various elements of the planning process.
Many of the owners I have talked to seem to be ‘marching in place’ acknowledging that they need to plan for their future but are in denial about the need to plan ahead. They seem to believe that the process is simple and the time to ‘make it happen’ will be short. Actually, that’s not the case for most of them.
Every Business Owner needs to develop a transition strategy with plenty of time to execute it 'on their time table' to withdraw their equity, assure the continued success of their business and, prepare, personally, for the 'next phase' of their life.
The transition strategy must address three key areas of concern:
Financial
Personal
Company
They often have addressed the financial aspect but not the other two.
Here are five key questions for the Business Owner to answer that become the building blocks of each Transition Strategy:
1) How will I harvest my investment?
2) Who will purchase my business?
Will I sell to an external buyer?
Will I sell internally - to my family, partners, key staff?
3) What is the legacy I want to leave?
4) What do I want to do in the next phase of my life?
5) What is my timetable?
Developing and implementing a Transition Strategy can be a long term process that begins with working out the answer to these questions, planning the strategy and identifying the action steps to 'make it all happen.'
All these questions are inter-related. For instance, the owner must decide who the prospective buyers might be. If it will be internal buyers, the seller must determine that the buyers are prepared well in advance. The buyers must have passion, the ability to manage the business and the money to buy the business on the owner’s terms.
Several owners I've worked with expected to sell to their partners or staff only to discover that there wasn't enough time or the potential buyers didn't have the resources.
I have also worked with several owners who think they are ready to sell the business but 'get cold feet' because they aren't prepared, emotionally, to move on with their lives. They haven't chosen a next phase of their lives after they make the transition. Making the decisions feels like a dead end or like falling off a cliff. So they hold on too long and their equity diminishes.
For the transition to be successful, the owner must addresses the five questions and develop a comprehensive Transition Strategy well in advance.
My work focuses on these five questions. I begin working with the business owner, helping her or him explore their aspirations and cataloguing the key issues they need to address to plan their transition, Working with the owner, and sometimes their key professional advisors, I help the owner identify he or/his desired results and develop a transition strategy to achieve those results.
In future articles, I’ll discuss various elements of the planning process.
Monday, May 2, 2011
SUCCESSFULLY EXITING YOUR BUSINESS
Seventy five per cent of all business owners regretted selling their business 12 months after the sale! (According to a recent survey by PriceWaterhouseCoopers)
That’s a significant number! Especially for business owners whose life and identity are wrapped up in their business.
The solution is not to hold on to the business. Owners who hold on are in danger of ‘staying when they need to move on,’ dragging the company down.
Staying too long, the business owner ‘loses steam’ and begins to drain the business of its vitality. Instead of being a revenue generator, the business ‘bleeds’ the owner’s investment.
If you are planning an internal sale to your staff, partners etc., staying also limits the opportunity for the next generation to set a new direction - to infuse the company with the creativity and energy it needs to survive and grow.
Seeing diminishing potential for personal opportunity, the best people may leave – joining your competition.
The solution is for every business owner to envision a ‘Next Phase’ of their life after work and create something to look forward to. This is a very personal challenge – one that takes time and contemplation.
“What will I do next?” You decide! The Owners goal is to explore what beyond their business has personal meaning – to discover their deeper ‘Life Purpose’ and choose that ‘next phase’ of life that builds on that life purpose.
Choosing your ‘Next Phase’ is a challenge! To learn how I can help you, visit my web site
www.Life-Work-Transitions.com
That’s a significant number! Especially for business owners whose life and identity are wrapped up in their business.
The solution is not to hold on to the business. Owners who hold on are in danger of ‘staying when they need to move on,’ dragging the company down.
Staying too long, the business owner ‘loses steam’ and begins to drain the business of its vitality. Instead of being a revenue generator, the business ‘bleeds’ the owner’s investment.
If you are planning an internal sale to your staff, partners etc., staying also limits the opportunity for the next generation to set a new direction - to infuse the company with the creativity and energy it needs to survive and grow.
Seeing diminishing potential for personal opportunity, the best people may leave – joining your competition.
The solution is for every business owner to envision a ‘Next Phase’ of their life after work and create something to look forward to. This is a very personal challenge – one that takes time and contemplation.
“What will I do next?” You decide! The Owners goal is to explore what beyond their business has personal meaning – to discover their deeper ‘Life Purpose’ and choose that ‘next phase’ of life that builds on that life purpose.
Choosing your ‘Next Phase’ is a challenge! To learn how I can help you, visit my web site
www.Life-Work-Transitions.com
Saturday, October 3, 2009
DISCOVERING COMMON GROUND
Yesterday, I made a presentation on business succession planning at the Niagara EXPO and the conversation with the group was facinating!
The conversation focused on the three elements of successful succession: Financial, Organizational and Personal transition. My beginning mindset was on business leaders and business owners contemplating retirement.
But the majority of people in the room were not business leaders or business owners! They were middle managers and even a couple of folks just out of college who were a long ways from retirement. So I 'fine tuned' the presentation to fit their interests and backgounds.
I had a similar experience a few weeks ago when I presented to a group of financial planners. I started talking about business owners and discovered that many in the room had shifted their 'take' on the presentation to their personal situations!
The neat thing about both experiences was that the three part focus: financial, organization and personal resonated with both groups! I discovered that no matter where a person is in their life, when they step back to gain a perspective, they have concerns/interests in all three areas.
They discover that they need to think about where they are and where they want to go - and then make 'life adjustments' to get themselves on track to live a live that will be rewarding and fulfilling to them. They must live their lives by their standards and values, not someone else's.
So I'll keep my three part focus but expand my perspective to a wider range of people including business leaders and owners and others, too.
The conversation focused on the three elements of successful succession: Financial, Organizational and Personal transition. My beginning mindset was on business leaders and business owners contemplating retirement.
But the majority of people in the room were not business leaders or business owners! They were middle managers and even a couple of folks just out of college who were a long ways from retirement. So I 'fine tuned' the presentation to fit their interests and backgounds.
I had a similar experience a few weeks ago when I presented to a group of financial planners. I started talking about business owners and discovered that many in the room had shifted their 'take' on the presentation to their personal situations!
The neat thing about both experiences was that the three part focus: financial, organization and personal resonated with both groups! I discovered that no matter where a person is in their life, when they step back to gain a perspective, they have concerns/interests in all three areas.
They discover that they need to think about where they are and where they want to go - and then make 'life adjustments' to get themselves on track to live a live that will be rewarding and fulfilling to them. They must live their lives by their standards and values, not someone else's.
So I'll keep my three part focus but expand my perspective to a wider range of people including business leaders and owners and others, too.
Monday, September 28, 2009
YOU HAVE TO LET GO TO WIN
A few days ago the Gallup Organization published the results of an eight month survey that showed that business owners have the highest overall well-being of any occupation group – followed closely by Professionals and Managers/Executives.
Another article, published immediately after the Gallup publication, said the findings ‘reflect the importance of being able to choose the work you do and how you do it. The way you manage your time, and the way you respond to adversity.”
In other words, business owners and, to a slightly lesser extent, professionals and managers/executives, derive greater ‘psychic income’- emotional satisfaction – from their work than most other groups.
It's no wonder they don’t give much thought to retirement – what they will do in the ‘third phase’ of their lives. I hear comments like: “I’m happy doing what I’m doing,” “I just going to keep on doing it,” “I’m not ready,” “The company isn’t ready,” etc.
Thinking about making their transition requires them to take time from what they enjoy (love!) doing – so the put it off ‘til later, ‘when I’ve got time.’
The downside is that they are in danger of suffocating their business – the very thing that the have spent their life building!
They run out of personal energy and ideas, the company loses its competitive edge and the best of the next generation, the potential future leadership, seeing no opportunity for growth, move on while the mediocre hang and ‘settle in.’ Slowly, the business ‘dies in the vine’ and the leader’s lifetime investment is squandered.
Every business leader – to assure a successful transition needs to ask – and answer – questions in three key areas:
FINANCIAL - How will I transfer my wealth out of the business into my personal portfolio?
ORGANIZATIONAL - How will I create my legacy – a strong, sustainable company that will thrive after I retire?
PERSONAL - How will I build a meaningful ‘third phase’ of my life – something I am looking forward to after I retire?
Doing all this takes time – time to transfer your wealth, time to build your organization and develop the people to lead it, and time to create your new life. Waiting too long can limit, even destroy your ability to make a successful transition.
No matter how much you love what you are doing now, it’s essential to start planning early. When is the right time? It all depends on your specific circumstances. The key is to start early rather than late. Start too late and you can lose every thing you built – and end up ‘lost in the wilderness.’
Another article, published immediately after the Gallup publication, said the findings ‘reflect the importance of being able to choose the work you do and how you do it. The way you manage your time, and the way you respond to adversity.”
In other words, business owners and, to a slightly lesser extent, professionals and managers/executives, derive greater ‘psychic income’- emotional satisfaction – from their work than most other groups.
It's no wonder they don’t give much thought to retirement – what they will do in the ‘third phase’ of their lives. I hear comments like: “I’m happy doing what I’m doing,” “I just going to keep on doing it,” “I’m not ready,” “The company isn’t ready,” etc.
Thinking about making their transition requires them to take time from what they enjoy (love!) doing – so the put it off ‘til later, ‘when I’ve got time.’
The downside is that they are in danger of suffocating their business – the very thing that the have spent their life building!
They run out of personal energy and ideas, the company loses its competitive edge and the best of the next generation, the potential future leadership, seeing no opportunity for growth, move on while the mediocre hang and ‘settle in.’ Slowly, the business ‘dies in the vine’ and the leader’s lifetime investment is squandered.
Every business leader – to assure a successful transition needs to ask – and answer – questions in three key areas:
FINANCIAL - How will I transfer my wealth out of the business into my personal portfolio?
ORGANIZATIONAL - How will I create my legacy – a strong, sustainable company that will thrive after I retire?
PERSONAL - How will I build a meaningful ‘third phase’ of my life – something I am looking forward to after I retire?
Doing all this takes time – time to transfer your wealth, time to build your organization and develop the people to lead it, and time to create your new life. Waiting too long can limit, even destroy your ability to make a successful transition.
No matter how much you love what you are doing now, it’s essential to start planning early. When is the right time? It all depends on your specific circumstances. The key is to start early rather than late. Start too late and you can lose every thing you built – and end up ‘lost in the wilderness.’
Wednesday, June 17, 2009
RETHINKING MY MISSION STATEMENT
Ever since I 'finalized' my mission statement (see the masthead at the top of this blog) a few months ago, I've had an uneasy feeling. It just wasn't quite right.
First, my focus isn't just business owners - its business leaders, both owners and non owners.
My expertise (and my passion) is in two areas:
First, my focus isn't just business owners - its business leaders, both owners and non owners.
My expertise (and my passion) is in two areas:
- Helping business leaders build the next generation of company leadership - including both their successor and the leadership team - to assure the future success of the company.
- Helping those leaders plan and implement their personal transition from the business into life after work - what I call their 'third phase.'
Second, ownership transfer, including 'harvesting income upon retirement' is the work of lawyers and financial advisors - people the business owner (hopefully) already has retained.
My role is as a personal coach, team builder and strategic planner - all areas of focus significantly different than the work of lawyers and financial advisors. I might often interact with these professionals but, most of the time, I see myself working directly with leaders and the leaders' team.
So, based on this reasoning, I have changed my mission statement to:
Coaching business leaders contemplating retirement
Who want to leave a lasting legacy and
Build a meaningful life after work.
There, that feels better!
Tuesday, June 9, 2009
MORE THAN JUST FAMILY BUSINESSES
I find it interesting how many times, when Succession Planning comes up in a conversation, that subject immediately focuses on family businesses. I was interviewed by a local business journal and never mentioned family business in our conversation but, sure enough, that's all was talked about in the article! Even my comments were edited to relate to family businesses.
True, every family business needs to have the transition from one generation to the next fully thought out well in advance.
The senior generation has to be prepared to let go and move on.
The incoming generation has to be prepared to assume the reins.
The company has to be organized to execute the transition in an effective, seamless manner.
The legal and financial programs need to be in place ready to be implemented at the right time - often over a period of time.
And all this has to happen for non family businesses, too! In many ways the issues that must be addressed are the same - except the family businesses may have to deal with more emotional issues.
All succession planning involves the senior generation members acknowledging their mortality and making plans for moving into what I call the 'third phase' of their life. Staying in a state of denial can rob the company of any potential to survive and proper into the future.
Most owners want their company to continue on. That also means identifying and developing the future leaders well in advance of the time for the transition to actually take place. In some instances, it may mean recruiting new future potential leaders (and owners) if the current people don't have what it will take.
But, when the 'next generation' was never developed, an internal sale isn't an option. Then, sale to an outside party is the better answer. And sometimes the external sale can generate more retirement income for the seller.
In every transition, family or non family, the challenge is to work out a myriad of details well in advance of the 'event.' More on that later.
The bottom line - whether a family business or not, developing and implementing a successful transition takes time, planning - and a will of the current owner to let go of the comfortable present to move into the different future.
True, every family business needs to have the transition from one generation to the next fully thought out well in advance.
The senior generation has to be prepared to let go and move on.
The incoming generation has to be prepared to assume the reins.
The company has to be organized to execute the transition in an effective, seamless manner.
The legal and financial programs need to be in place ready to be implemented at the right time - often over a period of time.
And all this has to happen for non family businesses, too! In many ways the issues that must be addressed are the same - except the family businesses may have to deal with more emotional issues.
All succession planning involves the senior generation members acknowledging their mortality and making plans for moving into what I call the 'third phase' of their life. Staying in a state of denial can rob the company of any potential to survive and proper into the future.
Most owners want their company to continue on. That also means identifying and developing the future leaders well in advance of the time for the transition to actually take place. In some instances, it may mean recruiting new future potential leaders (and owners) if the current people don't have what it will take.
But, when the 'next generation' was never developed, an internal sale isn't an option. Then, sale to an outside party is the better answer. And sometimes the external sale can generate more retirement income for the seller.
In every transition, family or non family, the challenge is to work out a myriad of details well in advance of the 'event.' More on that later.
The bottom line - whether a family business or not, developing and implementing a successful transition takes time, planning - and a will of the current owner to let go of the comfortable present to move into the different future.
Wednesday, June 3, 2009
WHAT'S WITH THE NAME?
I considered a bunch of names for this blog but, in the end, the decision was pretty straightforward.
My family and I brainstormed a list of names: Moving on, What's next, Your next move, Into the future and a lot of really neat ones but none of them were available.
I had also thought of three others.
Transition Success and Transition Strategies were high on my list. They are at the core of what succession planning is all about. Succession includes several different versions of transition: transition of leadership, transition of ownership and personal transition from a life centered on work to a life that has a different, equally meaningful and satisfying purpose.
We'll be exploring various aspects of transition in future blogs - as part of succession planning.
I finally came to the choice of SUCCESSION SUCCESS. That covers it all. And it's a phrase that everyone identifies with. And like the old Prego ad 'transition is in there!'
Next time, we'll begin to explore succession planning and the various aspects of transition. And in the future, we'll go lots of other places!
It's good to be with you. See you soon.
Pete Wendel
My family and I brainstormed a list of names: Moving on, What's next, Your next move, Into the future and a lot of really neat ones but none of them were available.
I had also thought of three others.
Transition Success and Transition Strategies were high on my list. They are at the core of what succession planning is all about. Succession includes several different versions of transition: transition of leadership, transition of ownership and personal transition from a life centered on work to a life that has a different, equally meaningful and satisfying purpose.
We'll be exploring various aspects of transition in future blogs - as part of succession planning.
I finally came to the choice of SUCCESSION SUCCESS. That covers it all. And it's a phrase that everyone identifies with. And like the old Prego ad 'transition is in there!'
Next time, we'll begin to explore succession planning and the various aspects of transition. And in the future, we'll go lots of other places!
It's good to be with you. See you soon.
Pete Wendel
Tuesday, June 2, 2009
WHY A BLOG?
Here is my first blog entry - after eight years of writing a newsletter.
I'll still continue to publish a newsletter from time to time. The newsletter gives me a space to develop ideas in more depth and to stay in touch with those who aren't into 'that blog stuff.'
The blog format gives several advantages not available with a newsletter.
It's easier for people interested in succession planning to find me through my 'tags' and the search engine system. The expansion of my contacts through the newsletter was mostly people who I had met - a slow process.
Blogs are much easier to publish so I plan to produce an issue much more often that I can so a newsletter.
The interaction with blog readers is more robust. Readers can make comments that I and other readers can read and respond to. The result is more dialogue, more trading of ideas and through that dialogue a greater chance for all of us to learn.
So here we go! SUCCESSION SUCCESS - the blog, is up and running.
Pete Wendel
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