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What is Business Success Planning?

Business Success Planning is a term that I had the opportunity to borrow from Edric McSween, a Business and Estate Planning Financial Advisor. We have begun a collective advisory group to support Small Businesses and Closely Held Companies to realize that achieving success for your business is to have a future centered plan incorporating legal and financial considerations.
As we look at estate planning as a method of maintaining wealth within the family, the same applies to Business Success Planning and its impact on the economic and community development. Many businesses are created out of blood, sweat, and tears that the entrepreneur took from more home equity loans, credit cards, sleepless nights and stress-filled days. We use the term Success Plan instead of Succession Plan because the goal is not just to move people into roles for the next generation but the goal is to create for the owner satisfaction in the transition, professionally and financially.

As we know, we will not live forever and we may not want or be able to work in the company that we have built forever. We must create the Success Plan that is able to satisfactorily determine where we would want the company to be and how we personally should successfully transition.

An easy answer and a great fantasy for many is to have the delightful cherub, “fruit of our loins” take over the company. However, that reality is often a fantasy. Approximately 30% of small businesses pass to the next generation. Only 30% beyond that pass to the third generation. Many times our children don’t share our passion, purpose or, frankly, competence in the area where we have chosen to build our business. I recently experienced that heartbreak when my daughter graduated from law school and confided that she was not passionately in love with Trusts and Estates! Yet, she is still young and there is still time to make a change, however, I know that my planning must go beyond her for succession.

Closely Held Companies have many considerations and options in building a succession plan. There are times when we want to consider transferring ownership to the employees so that they can take pride and ownership of the company and continue to build the company’s capacity, while potentially maintaining an interest as well as an income stream. There may be a buyer that can take advantage of creative financing options that benefit the seller to move through the transition.

Stephen Covey’s famous quote, “Begin with the end in mind”, is a reality that we don’t typically have the luxury of holding. Many times we are in the midst of operating our business while we are planning it. This business could potentially have started out of a need to create a job, out of a life transition or a passion that was burning inside. Irrespective of the starting point, we built the business and it is now a going concern. We are proud of the legacy that we have founded. We are proud of the service it provides to the customers and we are proud of the jobs and economic strength it provides to the employees and vendors. The business has created a network, a family that depends upon it. We are proud. Giving birth to a business is akin to giving birth to a child. Although we know that there may come a time for it to transition to the next level without us, we hesitate to provide a success path for the business to grow and become independent of us.

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