Issue link: http://read.dmtmag.com/i/591462
Step 1: According to Mack Financial Services, it's important to start the succes- sion process early – 5 to 10 years in advance of the transition is the recommended time- frame. The earlier the better, as this helps smooth out the transition, as opposed to rushing through the process. A well thought out plan will give your business the best chance to succeed after your departure. Step 2: Choose the right consultant. Go with someone who has experience in handling fam- ily business issues in your industry. One place to start is the Family Firm Institute (www.ffi . org). FFI describes itself as "educating, con- necting and inspiring professionals who serve family enterprises. It is the organization of choice for the advisors, consultants, educators and researchers who help perpetuate trans-generational family business wealth." Step 3: Have accurate books and fi nancial statements. "You need to know where the business is in order to design for the future," says Tom Marx, CEO of the Marx Group Advisors. Hugh Roberts, partner in The Rawls Group, says you need to know if the business is positioned well for success. "And you have to know what are the defi ciencies and what landmines are out there that could blow things up." Step 4: Understand the difference between the sales price if you were to actually sell the business and the value of the business if you are transferring it to a family member or members. Step 5: Know your goals and objectives. "Be clear about what you are trying to do," Marx says. "Are you trying to develop a retirement plan for yourself or do you want to extend the business, but work fewer hours? You really need to know what your objectives are before you can design the actual succession plan itself." Step 6: Make your plan from a logical stand- point, keeping in mind what is best for the overall business, the customers and your employees. Keep key participants, including 1 0 | BULLDOG | 2 0 1 5 V 3 Basic steps of succession planning Choosing the leader Decide your successor realistically based on who is best fi tted to lead the company in the future. Often, the fi rst-born child may not be the best fi t for the position. You may consider giving the person who will run the company a larger share of the ownership, or more voting rights. Everyone can't be equal. You may want to separate ownership from management of the operations. Always consider what is in the best interest of your company. Source: Mack Financial Services There are a lot of decisions to be made during the succession-planning process, says Leslie Fry, partner in Dixon Hughes Goodman LLP. "There is no succession- planning checklist or cookie-cutter approach you can use. Each plan is unique because you have so many different variables to consider." However, these basic steps will get you started. 1 Services, it's important to start the succes- 1 Services, it's important to start the succes- sion process early – 5 to 10 years in advance 1 sion process early – 5 to 10 years in advance of the transition is the recommended time- 1 of the transition is the recommended time- frame. The earlier the better, as this helps 1 frame. The earlier the better, as this helps smooth out the transition, as opposed to 1 smooth out the transition, as opposed to rushing through the process. A well thought 1 rushing through the process. A well thought out plan will give your business the best 1 out plan will give your business the best 2 ily business issues in your industry. One place 2 ily business issues in your industry. One place to start is the Family Firm Institute (www.ffi . 2 to start is the Family Firm Institute (www.ffi . org). FFI describes itself as "educating, con- 2 org). FFI describes itself as "educating, con- necting and inspiring professionals who serve 2 necting and inspiring professionals who serve family enterprises. It is the organization of 2 family enterprises. It is the organization of choice for the advisors, consultants, educators 2 choice for the advisors, consultants, educators and researchers who help perpetuate 2 and researchers who help perpetuate 3 says Tom Marx, CEO of the Marx Group 3 says Tom Marx, CEO of the Marx Group Advisors. Hugh Roberts, partner in The Rawls 3 Advisors. Hugh Roberts, partner in The Rawls Group, says you need to know if the business 3 Group, says you need to know if the business is positioned well for success. "And you have 3 is positioned well for success. "And you have to know what are the defi ciencies and what 3 to know what are the defi ciencies and what landmines are out there that could blow 3 landmines are out there that could blow 4 Understand the difference between 4 Understand the difference between the sales price if you were to actually sell the 4 the sales price if you were to actually sell the business and the value of the business if you 4 business and the value of the business if you are transferring it to a family member or 4 are transferring it to a family member or 5 clear about what you are trying to do," Marx 5 clear about what you are trying to do," Marx says. "Are you trying to develop a retirement 5 says. "Are you trying to develop a retirement plan for yourself or do you want to extend the 5 plan for yourself or do you want to extend the business, but work fewer hours? You really 5 business, but work fewer hours? You really need to know what your objectives are before 5 need to know what your objectives are before you can design the actual succession plan 5 you can design the actual succession plan COVER STORY