Business succession planning and owners big fears

Currently, I am working on a project with Amiba ( https://amiba.net/) and Infinity Point (https://www.infinitypointcdfi.org)

Screech Owl
Owls have the wisdom to do business succession planning early and often.

on business succession.

The challenge starts with there are about 2.34 million businesses owned by the Baby Boomer generation that collectively generates more than $5 billion in sales and employs 24.7 million people–about one-sixth of all U.S. workers.

Forward thinkers have been discussing this probable impending crisis for at least a decade. While we are in it now! This next decade will be a crux situation on many levels. The outcome remains in flux for millions of dollars for owners, jobs for people, and services for communities. As the stats indicate this will affect people and communities throughout America.

Let’s examine the primary challenge to this massive change of business succession.

Here is a list of fears, reasons, and/or excuses in my work I have repeatedly experienced business owners use to avoid addressing their companies succession plan one of the biggest decisions that will affect their lives, their families, their community, and more.

-I am too busy just running my business

-I have never been a planner, why start now

-I am afraid of people finding out about all the untaxed cash I have pocketed

-I am uncomfortable with people learning about all the personal expenses I have put through my business tax-free

-I don’t have a family member interested in taking over the business owners

-None of my employees are interested in being owners

-I don’t want my employees/community/competitors to know what I view as my personal business

-I don’t know a business broker (and I have no advisors I listen to)

-My accountant says my business is worth (a lot, a little, etc)

-I have unrealistic expectations and no one is offering me my fantasy price

-Why think about it, I am not ready to retire yet

-I am financially unsophisticated and don’t understand the complex offer structures I am getting

-No one I know is talking about it

-I was raised on John Wayne walking alone on Main St taking on the whole world by himself and that is my plan

-I am paralyzed with indecision

-I prefer to spend my time thinking about going to the dentist o

As we can see ending or transferring a business might be as fraught with challenges as starting one.

I have one friend who chose to just close his business even though his industry stats suggest he left about $500,000 on the table, a surprisingly common situation.

Why is so much planning needed? First maximizing your business’s balance sheet can have a huge impact (not sure what I am referring to could be a good indication you need help). So many different and interlocking areas of your business are affected. Depending on how the deal is structured you might be forced to pay hundreds of thousands in taxes. Other options could put that money in your pocket with some patience and creativity. Rarely is a business sold where a single check is written for the whole amount. Something rarely considered is selling to your employees which has many benefits and should always be considered. I am just scratching the surface here, wanting you to understand both the complexities and the upsides.

One thing I am absolutely sure of is fear has no place in this high-stakes strategic planning. Brain coherence and our approaches to mindfulness are ideally suited to maximizing your performance in these high-stress processes.

What will Main St in your town look like if about a third of the shops, restaurants are empty and no way to fill them (sadly COVID-19 has been doing its best to make this a reality for the past 18 months it does not need any help).

This is one of those times when pushing through our emotional discomfort can have a huge impact. The downside consequences can be huge.

Here at the Coherence Collaborative, we specialize in helping business owners understand their options and doing the inner work to feel confident and have clarity in their decision-making on this vital topic.

 

 

 

 

 

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